Author: Anonymous

Team Tennis owns 40% of Best Racquets, Inc. and accounts for the investment using the equity method. During the year, Best Racquets reports a net income of $2,400,000 and pays total dividends of $60,000.By how much did Team Tennis’ investment in Best Racquets change for the year? (indicate a decrease with a minus sign) $[1]

Joe’s Soup plant is running at 52% of its monthly capacity of 2,000 cases. Joe’s Soup plant has just received a special order to produce 400 cases of mushroom noodle soup for a statewide supermarket. The supermarket will sell the soup under its own private brand label. The soup will be the same in all respects, except for the label, which will cost Joe’s Soup plant an extra $400 in total to design. The supermarket has offered to pay only $19.00 per case, which is well under Joe’s normal sales price. Costs at the current production level (450 cases) are as follows: Manufacturing Costs Total Cost Cost per Case Direct materials $4,500 $10.00 Direct labor 1,350 3.00 Variable manufacturing overhead 900 2.00 Fixed manufacturing overhead 2,700 6.00 Total $9,450 $21.00 If Joe’s Soup plant accepts the offer, profits will increase (decrease) by how much.  Indicate a decrease with a leading minus sign. $[1]

Dispose of lab materials properly, including putting broken slides and glassware in the glass disposal boxes. If you are unaware of the proper disposal, ask your instructor.

Which of the following statements are correct in relation to MM Proposition II with no taxes? The return on assets is equal to the weighted average cost of capital. Financial risk is determined by the debt-equity ratio. Financial risk determines the return on assets. The cost of equity declines when the amount of leverage used by a firm rises.

A 12-year 7.7% semi-annual coupon bond is callable in 7 years with a call premium of $1,045.  The current price is $947.    What is the yield to call? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations)

Issuing debt instead of new equity in a closely held firm more likely: 

A market participant who buys and sells securities from their own inventory is called a:

Which of the following statements is correct concerning the financial break-even point of a project? The present value of the cash inflows equals the amount of the initial investment. The payback period of the project is equal to the life of the project. The operating cash flow is at a level that produces a net present value of zero. The project never pays back on a discounted basis.

What is the purpose of a system?

Please make sure you have TVs and music turned off. Please take your exam in a secure place where you will not be interrupted by people walking in on you or talking to you while you take your exam. Avoid public places (Starbucks, McDonalds, etc.).