31 Jan Ningbo Shipping has common

Quiz 5

Question 1

When determining the operating cycle, which of the following components reduce the length of the cycle?

Question 2

Working capital does not include:

Question 3

A firm can reduce its cash conversion cycle by

Question 4

Assume a firm’s production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold. If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days, what would the operating cycle be?

Question 5

Which of the following would not normally be discussed when describing a firm’s operating cycle?

Question 6

In order to borrow $100,000 for a 10% loan on discount basis, the firm will actually have to borrow:

Question 7

When old short-term debt is replaced by new short-term debt as the old debt comes due, the process is known as:

Question 8

If total assets are $100,000, fixed assets are $30,000, current liabilities are $20,000, then net working capital is:

Question 9

A compensating balance on a bank loan effectively ____________ the cost of the loan.

Question 10

Which would not be likely to be accepted as collateral for an inventory loan?

Question 11

Internal rate of return (IRR) and net present value (NPV) methods:

Question 12

The time required for the cumulative cash flows from a project to equal zero is called the:

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Question 13

Which of the following is not considered a stage in the capital budgeting process?

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Question 14

If a project has a positive net present value (NPV), then the profitability index is:

Question 15

The process of allocating funds among competing investment opportunities is referred to as:

Question 16

The cost of capital for retained earnings:

Question 17

Ningbo Shipping, which has an average tax rate of 40 percent, would like to estimate the after-tax cost of debt for a 15-year, 12 percent, $1,000 par value bond, selling at $950. Based on this information, the after-tax cost of debt is:

Question 18

Ningbo Shipping has common stock with a market price of $25 per share and an expected dividend of $2 per share at the end of the coming year. The growth rate in dividends has been 5 percent and this growth is expected to continue indefinitely. Based on this information, the cost of the firm’s common stock equity is

Question 19

The cost of debt:

Question 20

The cost of retained earnings is: