Question 1

________ is the amount of additional external financing needed to fund planned increases in assets.

Accepted Answer

A)  Net new financing 
B)  Equity issuance 
C)  Debt issuance 
D)  Preferred stock issuance 
A)  Net new financing 
B)  Equity issuance 
C)  Debt issuance 
D)  Preferred stock issuance

Question 2

Use the tables for the question(s) below.
Pro Forma Income Statement for Ideko, 2010-2015
   Pro Forma Balance Sheet for Ideko, 2010-2015
  
-With the proper changes it is believed that Ideko's credit policies will extend a 60 days credit period to accounts receivables. The forecasted accounts receivable for Ideko in 2012 is closest to ________.

Accepted Answer

A)  $14,525 
B)  $16,970 
C)  $22,710 
D)  $19,690 
A)  $14,525 
B)  $16,970 
C)  $22,710 
D)  $19,690

Question 3

The asset and liability side of a pro forma balance sheet projection will not balance, in general, unless we make assumptions about how ________ and ________ will grow with sales.

Accepted Answer

A)  dividends, equity 
B)  coupons, debt 
C)  debt, equity 
D)  dividends, preferred stock 
A)  dividends, equity 
B)  coupons, debt 
C)  debt, equity 
D)  dividends, preferred stock

Question 4

A firm has $40 million in equity and $20 million of debt, it pays dividends of 20% of net income, and has a net income of $10 million. What is the firm's internal growth rate?

Accepted Answer

A)  12.2% 
B)  13.3% 
C)  14.1% 
D)  15.2% 
A)  12.2% 
B)  13.3% 
C)  14.1% 
D)  15.2%

Question 5

A firm has interest expense of $6,500 each year for ten years. If the tax rate is 35% and the discount rate is 6%, compute the value of the interest rate tax shield.

Accepted Answer

A)  $16,744 
B)  $16,424 
C)  $16,578 
D)  $16,987 
A)  $16,744 
B)  $16,424 
C)  $16,578 
D)  $16,987

Question 6

Internal growth rate assumes that the firm can finance investments via sale of debt.

Accepted Answer

A) True 
 B)False

Question 7

Compute the after-tax interest expense for a firm with Interest on Excess Cash = $5,000, Interest on Debt = $8,000, and a tax rate of 30%.

Accepted Answer

A)  $2,100 
B)  $2,200 
C)  $2,500 
D)  $2,700 
A)  $2,100 
B)  $2,200 
C)  $2,500 
D)  $2,700

Question 8

For valuing a planned expansion, in addition to forecasting cash flows we need to estimate the firm's continuation value.

Accepted Answer

A) True 
 B)False

Question 9

If a firm is planning an expansion or changes in how it manages its inventory, long term financial planning can help determine the impact on the firm's ________.

Accepted Answer

A)  debt financing 
B)  capital investment 
C)  free cash flows 
D)  all of the above 
A)  debt financing 
B)  capital investment 
C)  free cash flows 
D)  all of the above

Question 10

A firm has interest expense of $3,500 each year for ten years. If the tax rate is 35% and the discount rate is 8%, compute the value of the interest rate tax shield.

Accepted Answer

A)  $7,091 
B)  $7,514 
C)  $8,220 
D)  $8,716 
A)  $7,091 
B)  $7,514 
C)  $8,220 
D)  $8,716

Question 11

Which of the following accounts may reasonably be expected to grow with sales? I. Accounts Receivable
  V. Long-Term Debt

Accepted Answer

A)  I, II, and III 
B)  I, II, and V 
C)  I, II and IV 
D)  III and V 
A)  I, II, and III 
B)  I, II, and V 
C)  I, II and IV 
D)  III and V

Question 12

Use the table for the question(s) below.
Ideko Sales and Operating Cost Assumptions
  
-Based upon Ideko's Sales and Operating Cost Assumptions, what production capacity will Ideko require in 2007?

Accepted Answer

A)  1,505,000 units 
B)  1,323,000 units 
C)  1,914,000 units 
D)  1,115,000 units 
E)  1,702,000 units 
A)  1,505,000 units 
B)  1,323,000 units 
C)  1,914,000 units 
D)  1,115,000 units 
E)  1,702,000 units

Question 13

The goal of the financial manager is to maximize the value of the shareholders' stake in the firm.

Accepted Answer

A) True 
 B)False

Question 14

When the projected liabilities and equity are greater than the assets, the firm can plan to ________.

Accepted Answer

A)  retain extra cash 
B)  pay dividends 
C)  retire debt 
D)  all of the above 
A)  retain extra cash 
B)  pay dividends 
C)  retire debt 
D)  all of the above

Question 15

Pledrea Inc. has EBITDA at the forecast horizon of $13,000. Its EBITDA multiple is 10. What is the terminal value of the firm at the forecast horizon?

Accepted Answer

A)  $100,000 
B)  $110,000 
C)  $120,000 
D)  $130,000 
A)  $100,000 
B)  $110,000 
C)  $120,000 
D)  $130,000

________ is the amount of additional external financing needed to fund planned increases in assets.

The asset and liability side of a pro forma balance sheet projection will not balance, in general, unless we make assumptions about how and will grow with sales.

A firm has $40 million in equity and $20 million of debt, it pays dividends of 20% of net income, and has a net income of $10 million. What is the firm's internal growth rate?

A firm has interest expense of $6,500 each year for ten years. If the tax rate is 35% and the discount rate is 6%, compute the value of the interest rate tax shield.

Internal growth rate assumes that the firm can finance investments via sale of debt.

Compute the after-tax interest expense for a firm with Interest on Excess Cash = $5,000, Interest on Debt = $8,000, and a tax rate of 30%.

For valuing a planned expansion, in addition to forecasting cash flows we need to estimate the firm's continuation value.

If a firm is planning an expansion or changes in how it manages its inventory, long term financial planning can help determine the impact on the firm's ________.

A firm has interest expense of $3,500 each year for ten years. If the tax rate is 35% and the discount rate is 8%, compute the value of the interest rate tax shield.

Which of the following accounts may reasonably be expected to grow with sales? I. Accounts Receivable V. Long-Term Debt

Use the table for the question(s) below. Ideko Sales and Operating Cost Assumptions -Based upon Ideko's Sales and Operating Cost Assumptions, what production capacity will Ideko require in 2007?

The goal of the financial manager is to maximize the value of the shareholders' stake in the firm.

When the projected liabilities and equity are greater than the assets, the firm can plan to ________.

Pledrea Inc. has EBITDA at the forecast horizon of $13,000. Its EBITDA multiple is 10. What is the terminal value of the firm at the forecast horizon?

Corporate Finance and the Financial Manager

Introduction to Financial Statement Analysis

Time Value of Money: an Introduction

Time Value of Money: Valuing Cash Flow Streams

Interest Rates

Bonds

Stock Valuation

Investment Decision Rules

Fundamentals of Capital Budgeting

Stock Valuation: a Second Look

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

The Cost of Capital

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Working Capital Management

Short-Term Financial Planning

Option Applications and Corporate Finance

Mergers and Acquisitions

International Corporate Finance

Leasing

Insurance and Risk Management

Corporate Governance

Filters

Exam 18: Financial Modeling and Pro Forma Analysis

________ is the amount of additional external financing needed to fund planned increases in assets.

The asset and liability side of a pro forma balance sheet projection will not balance, in general, unless we make assumptions about how ________ and ________ will grow with sales.

A firm has $40 million in equity and $20 million of debt, it pays dividends of 20% of net income, and has a net income of $10 million. What is the firm's internal growth rate?

A firm has interest expense of $6,500 each year for ten years. If the tax rate is 35% and the discount rate is 6%, compute the value of the interest rate tax shield.

Internal growth rate assumes that the firm can finance investments via sale of debt.

Compute the after-tax interest expense for a firm with Interest on Excess Cash = $5,000, Interest on Debt = $8,000, and a tax rate of 30%.

For valuing a planned expansion, in addition to forecasting cash flows we need to estimate the firm's continuation value.

If a firm is planning an expansion or changes in how it manages its inventory, long term financial planning can help determine the impact on the firm's ________.

A firm has interest expense of $3,500 each year for ten years. If the tax rate is 35% and the discount rate is 8%, compute the value of the interest rate tax shield.

Which of the following accounts may reasonably be expected to grow with sales? I. Accounts Receivable V. Long-Term Debt

Use the table for the question(s) below. Ideko Sales and Operating Cost Assumptions -Based upon Ideko's Sales and Operating Cost Assumptions, what production capacity will Ideko require in 2007?

The goal of the financial manager is to maximize the value of the shareholders' stake in the firm.

When the projected liabilities and equity are greater than the assets, the firm can plan to ________.

Pledrea Inc. has EBITDA at the forecast horizon of $13,000. Its EBITDA multiple is 10. What is the terminal value of the firm at the forecast horizon?

Corporate Finance and the Financial Manager

Introduction to Financial Statement Analysis

Time Value of Money: an Introduction

Time Value of Money: Valuing Cash Flow Streams

Interest Rates

Bonds

Stock Valuation

Investment Decision Rules

Fundamentals of Capital Budgeting

Stock Valuation: a Second Look

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

The Cost of Capital

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Working Capital Management

Short-Term Financial Planning

Option Applications and Corporate Finance

Mergers and Acquisitions

International Corporate Finance

Leasing

Insurance and Risk Management

Corporate Governance

Filters

The asset and liability side of a pro forma balance sheet projection will not balance, in general, unless we make assumptions about how and will grow with sales.