In what capacity do you use this equation: p_0=\frac{D_1}{R-G}

To calculate the constant growth rate

What is the defintion of IRR

The discount rate that sets NPV to zero

What does the current ratio tell us?

The company's ability to pay short-term liabilities due within one year

A discount bond is...

A bond that is issued for less than its par/face value

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Financial Management 2022

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Questions 15

Answers

1
APR takes into account compounding
False
True
2
Mutually exclusive projects are ones that if you choose one you cannot choose the other
False
True
3
In the PV formula, if R or T increases, what happens to PV
Pv is a silly equation
Pv increases
Pv decreases
Pv stays the same
4
What is the Total Debt Ratio of this balance sheet?
Guess and check
54.32%
52.61%
51.7%
5
In what capacity do you use this equation: p_0=\frac{D_1}{R-G}
To discount a cash flow
To calculate a perpetuity
To calculate the constant growth rate
To find the city of Atlantis
6
An increase to accounts recievable is a use of cash
False
True
7
What is the defintion of IRR
An investment's average net income divided by the average book value
The discount rate that sets NPV to zero
A graph of the relationship between an investment’s NPVs & discount rates
time required for investment discount cash flows to equal its initial cost
8
What does the current ratio tell us?
The company's ability to pay short-term liabilities with most liquid assets
The company's ability to pay short term liabilities only using cash
The company's currentness
The company's ability to pay short-term liabilities due within one year
9
Book value is the companies worth based on the total shares outstanding & current market price
False
True
10
A discount bond is...
A bond that is issued for less than its par/face value
A bond that goes to the discount store
A bond that cannot find a good discount
A bond that is issued above its par/face value
11
Real rate = nominal rate - inflation rate
True
False
12
How do you find the coupon rate?
pv=c[\frac{1-\frac{1}{\left(1+r\right)^{^t}}}{r}]
Coupon/Face Value
What even is a coupon rate?
13
If a company issues the same dividend forever, what equation would I use to value the company's stock?
y=mx+b
p_0=\frac{D}{R}
P_0=\frac{D_1}{R-g}
p_0=\frac{D_0\left(1+g\right)}{R-g}
14
If NPV is positive we reject the project
True
False
15
ROA is a measure of how the stockholders fared during the year
True
False

Financial Management 2022 Flashcards | StudBud