Saudi Electronic University

FIN 101

QUIZ 1

Question 1)You deposit $120 in a savings account earning 10% compounded annually for 6 years. How much is in the account at the end of that time

A. $230.111

B. $212.587

C. $250

D. $222.587

Question 2

Assume a firm's cash flow was 520,000$ last year, the cash flow is expected to increase by 6% per year forever. If you use a discount rate of 16%, what is the value of the firm ?

A. $5,532,800

B. $5,512,000

C. $5,550,000

D. $4,523,700

Question 3

Net income is equal :

1. EBIT - operating expenses - taxes
2. EBIT - Taxes
3. EBT - Taxes
4. EBIT - interests

Question 4

             Indicate how the market is valuing the firm's equity

1. Leverage ratios
2. Efficiency ratios
3. Profitability ratios
4. Market value ratios

Question 5

Your firm produced revenues of $1,145,227 in 2008. It has expenses (excluding depreciation) of

$812,640, depreciation of $131,335, and interest expense of $81,112. It pays an average tax rate of 35 percent. What is the firm's net income after taxes ?

A. $68,148

B. $78,091

C. $48,475

D. $76,848

Question 6

Working capital management decisions involve :

1. The fixed asset portion of the balance sheet .
2. How the firm should finance its assets.
3. Which productive assets the firm should employ.
4. How a firm's day-to-day financial matters should be managed.