FINMGT-Midterm 2 | FIN 3123 - Financial Management, Quizzes of Finance

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TERM 1 percentage of sales method DEFINITION 1 which one of the following terms is applied to the financial planning method which uses the projected sales level as the basis for determining changes in balance sheet and income account values TERM 2 dividend payout ratio DEFINITION 2 which one of the following terms is defined as dividends paid expressed as a percentage of net income TERM 3 retention ratio DEFINITION 3 addition to retained earnings divided by net income TERM 4 capital intensity ratio DEFINITION 4 which one of the following ratios identifies the amount of assets a firm needs in order to generate $1 in sales TERM 5 internal growth rate of a firm DEFINITION 5 maximum growth rate achievable excluding any external equity financing while maintaining a constant debt equity ratio TERM 6 sustainable growth rate of a firm DEFINITION 6 maximum growth rate achievable excluding any external equity financing while maintaining a constant debt equity ratio TERM 7 financial plan for a corporation DEFINITION 7 the following are needed to develop a __________________-how much net working capital will be needed-will additional fixed assets be required-will dividends be paid to shareholders- how much new debt must be obtained TERM 8 financial planning DEFINITION 8 considers multiple options and scenarios for the next two to five years TERM 9 sales forecast DEFINITION 9 you are getting ready to prepare pro forma statements for your businesswhich one of the following are you most apt to estimate first as you begin this process TERM 10 pro forma statements DEFINITION 10 are projections, not guarantees TERM 21 future value DEFINITION 21 you are investing $100 today in a savings account at your local bank. which one of the following terms refers to the value of this investment one year from now TERM 22 compounding DEFINITION 22 tracy invested $1000 five years ago and earns 4% on her investment. By leaving her interest earnings in her account, she increases the amount of interest she earns each year. The way she is handling her interest income is referred to as which one of the following TERM 23 interest on interest DEFINITION 23 steve invested $100 two years ago at 10% interest. The first year, he earned $10 interest on his $100 investment. He reinvested the second year, he earned $11 on his $110 investment. The extra $1 he earned in interest the second year is referred to as: TERM 24 simple interest DEFINITION 24 sara invested $500 six years ago at 5 percent interest. She spends her earnings as soon as she earns any interest so she only receives interest on her initial $500 investment. Which type of interest is Sara earning TERM 25 present value DEFINITION 25 shelley won a lottery and will receive $1000 a year for the next ten years. The value of her winnings today discounted at her discount rate is called TERM 26 discounting DEFINITION 26 terry is calculating the present value of a bonus he will receive next year. the process he is using is called TERM 27 Barb will earn interest on interest DEFINITION 27 Andy deposited $3000 this morning into an account that pays 5% interest, compounded annually. Barb also deposited $3000 this morning into an account that pays 5% interest, compounded annually. Andy will withdraw his interest earnings and spend it as soon as possible. Barb will reinvest her interest earnings into her account. Given this, what will happen TERM 28 Sue will have more money than Neal as long as they retire at the same time DEFINITION 28 Sue and Neal are twins. Sue invests $5000 at 7% when she is 25 years old. Neal invests $5000 at 7% when he is 30 years old. Both investments compound interest annual. Both sue and neal retire at age 60. Which one of the following statements is correct assuming that neither sue nor neal has withdrawn any money from their accounts TERM 29 time DEFINITION 29 which one of the following variables is the exponent in the present value formula TERM 30 they are reciprocals of each other DEFINITION 30 what is the relationship between present value and future value invest factors TERM 31 ordinary annuity DEFINITION 31 equal payments paid at regular intervals over a stated time period TERM 32 perpetuity DEFINITION 32 unending equal payments paid at equal time intervals TERM 33 stated interest rate DEFINITION 33 interest rate that is quoted by a lender is referred to as which one of the following TERM 34 effective annual rate DEFINITION 34 a monthly interest rate expressed as an annual rate would be an example of which one of the following rates TERM 35 annual percentage rate DEFINITION 35 what is the interest rate charged per period multiple by the number of periods per year called TERM 46 net present value DEFINITION 46 a project has an initial cost of $27,400 and a market value of $32,600. what is the difference between these two values called TERM 47 discounted cash flow valuation DEFINITION 47 which one of the following methods of project analysis is defined as computing the value of a project based upon the present value of the projects anticipated cash flows TERM 48 payback period DEFINITION 48 the length of time a firm must wait to recoup the money it has invested in a project is the TERM 49 internal rate of return DEFINITION 49 discount rate which causes the net present value of a project to equal zero TERM 50 mutually exclusive DEFINITION 50 if a firm accepts Project A it will not be feasible to also accept project B because both projects would require the simultaneous and exclusive use of the same piece of machinery. These projects are considered to be TERM 51 project has a net present value of zero DEFINITION 51 the project's cash inflows equal its cash outflows in current dollar terms TERM 52 increasing the project's initial cost at time zero DEFINITION 52 which one of the following will decrease the net present value of a project TERM 53 net present value DEFINITION 53 which one of the following methods determines the amount of the change a proposed project will have on the value of the firm TERM 54 cash inflow in the final year of the project DEFINITION 54 rossiter restaurants is analyzing a project that requires $180,000 of fixed assets. when the project ends, those assets are expected to have an aftertax salvage value of $45,000 salvage value handled when computing the net present value of the project TERM 55 increases the net present value of a project DEFINITION 55 an increase in the aftertax salvage value of the fixed assets TERM 56 net present value DEFINITION 56 is the best method of analyzing mutually exclusive projects TERM 57 liquidity bias and ease of use DEFINITION 57 which of the following are advantages of the payback method of project analysis TERM 58 project a only DEFINITION 58 samuelson electronics has a required payback period of three years for all of its projects. currently, the firm is analyzing two independent projects. project A has an expected payback period of 2.8 years and a net present value of $6800. Project B has an expected payback period of 3.1 years with a net present value of $28,400. Which projects should be accepted based on the payback decision rule TERM 59 some positive net present value projects to be rejected DEFINITION 59 applying the discounted payback decision rule to all projects may cause: TERM 60 Internal Rate of Return DEFINITION 60 is equal to the required return when the net present value is equal to zero