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    Multiple choice

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    Can you please assist me with the following questions? Thank you,

    9.) Dan plans to fund his individual retirement account (IRA) with the maximum contribution of $2,000 at the end of each year for the next 10 years. If Dan can earn 10 percent on his contributions, how much will he have at the end of the tenth year?

    A) $12,290
    B) $20,000
    C) $31,874
    D) $51,880

    10) A college received a contribution to its endowment fund of $2 million. They can never touch the principal, but they can use the earnings. At an assumed interest rate of 9.5 percent, how much can the college earn to help its operations each year?

    A) $95,000
    B) $19,000
    C) $190,000
    D) $18,000

    11) The ________ rate of interest creates equilibrium between the supply of savings and the demand for investment funds.

    A) nominal
    B) real
    C) risk-free
    D) inflationary

    12) All of the following are examples of long-term debt EXCEPT

    A) bonds.
    B) lines of credit.
    C) term loans.
    D) debentures.

    13) Another term sometimes applied to a common shareholder is a

    A) fundamental or basic owner of the firm.
    B) residual owner of the firm.
    C) net owner of the firm.
    D) reciprocal owner of the firm.

    14) Noncash charges such as depreciation and amortization ________ the firm's breakeven point.

    A) do not affect
    B) overstate
    C) understate
    D) decrease

    15) A firm has fixed operating costs of $525,000, of which $125,000 is depreciation expense. The firm's sales price per unit is $35 and its variable cost per unit is $22.50. The firm's cash operating breakeven point in units is

    A) 23,330.
    B) 32,000.
    C) 42,000.
    D) 52,000.

    16) One function of breakeven analysis is to

    A) create profits.
    B) describe leverage.
    C) evaluate the profitability of various sales levels.
    D) determine the amount of financing needed by the firm.

    17) The basic strategies for determining the appropriate financing mix are

    A) seasonal and permanent.
    B) short-term and long-term.
    C) aggressive and conservative.
    D) current and fixed.

    18) If a firm uses an aggressive financing strategy,

    A) it increases return and increases risk.
    B) it increases return and decreases risk.
    C) it decreases return and increases risk.
    D) it decreases return and decreases risk.

    19) One major risk a firm assumes in an aggressive financing strategy is

    A) the possibility that collections will be slower than expected.
    B) the possibility that long-term funds may not be available when needed.
    C) the possibility that short-term funds may not be available when needed.
    D) the possibility that it will run out of cash.

    20) Nico Mining, a U.S.-based MNC has a foreign subsidiary that earns $1,050,000 before local taxes, with all the after tax funds to be available to the parent in the form of dividends. The foreign income tax rate is 30 percent, the foreign dividend withholding tax rate is 15 percent, and the firm's U.S. tax rate is 35 percent. What are the funds available to the parent MNC if foreign taxes can be applied as a credit against the MNC's U.S. tax liability?

    A) $624,750
    B) $425,250
    C) $257,250
    D) $735,000

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    Solution Summary

    The solution explains some multiple choice questions in finance