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Question 11
A company had beginning retained earnings $63,100. During the year, the company reported sales $127,800, costs of goods sold $89,900, depreciation $11,200, dividends $28,000, and interest expenses $3,400. The tax rate is 35%. What is the retained earnings balance at the end of the year?
a. $50,245
b. $76,425
c. $68,455
d. $75,445
e. $53,615

Question 12
A company is considering remodeling a building which they own. The remodeling costs are estimated at $1,420,000. The building contains 75 rentals units. The company will increase the rent on each unit such that his total rental income increases by $400,000 a year for the next 5 years. At a discount rate 15%, what is the benefit of the remodeling project to the company?
a. -$32,145.91
b. -$46,767.61
c. -$49,922.17
d. -$79,137.96
e. -$76,824.57

Question 13
A company is investing $259,000 in a new project. The firm expects the project will produce cash flow $50,000 a year for the first two years, and $80,000 a year for the following three years. How long will it take the company to recover its initial investment in this project?
a. 2.98 years
b. 3.99 years
c. 2.74 years
d. 3.14 years
e. 5.21 years

Question 14
The spot rate between the U.K. and the U.S. is £0.5428 = $1, while the 1-year forward rate is £0.5320 = $1. The risk-free rate in the U.K. is 4.1%. The risk-free rate in the U.S. is 5.7%. How much profit can you earn on a loan of $10,000 by utilizing covered interest arbitrage?
a. $101.26
b. $51.33
c. $21.50
d. $26.80
e. $57.94

Question 15
A portfolio that is adequately diversified should produce a return which:
a. is superior to the overall market if the portfolio beta has been reduced to 1.0.
b. is equal to the risk-free rate.
c. is equivalent to beta multiplied by the market risk premium.
d. lies at a point on the security market line given the portfolio's beta.
e. is equal to the risk-free rate plus the standard deviation times the market risk premium

Question 16
Which of the following statements is false?
a. If interest rates are expected to decrease in the future, the graph depicting the term structure of interest rates will be downward-sloping.
b. A bond investor believes, based on statements made by the Federal Reserve governors, that interest rates will increase in the future. Therefore, this investor will demand an interest rate risk premium if they purchase a bond today.
c. All else equal, a bond with a rating of B will have a larger default risk premium than a bond with an A rating.
d. The liquidity premium is the portion of a nominal interest rate that represents compensation for the difference between short-term and long-term tax rates.
e. To offset the decreasing value of a dollar over time, bond investors demand an inflation premium.

Question 17
A company offers credit terms of 2/10, net 60. What is the effective annual rate on a $15,000 purchase if you forgo the discount?
a. 15.89%
b. 56.71%
c. 39.43%
d. 76.34%
e. 23.48%

Question 18
A year ago, Brad purchased 300 shares of ELX stock for $15,000. The stock is currently selling for $36 a share and Brad has decided to sell all of his shares. What is total return that Brad has earned on this investment if he received a special dividend $5 a share?
a. -18.00%
b. -19.00%
c. -17.38%
d. -19.50%
e. -14.58%

Question 19
You can exchange ?100 for $127.08 currently. The inflation rate in Euroland is expected to be 5.2% as compared to 4.6% in the U.S. Assuming that relative purchasing power parity exists, the exchange rate 3 years from now should be:
a. ?0.7827/$1
b. ?0.8128/$1
c. ?0.7903/$1
d. ?0.7811/$1
e. ?0.8011/$1

Question 20
Which one of the following situations is most apt to create an agency problem?
a. the company president receives a bonus based on the profits of the firm
b. a manager receives a bonus because he or she has hired the most new employees in the past year
c. an employee is paid twice the normal wage for working overtime to complete a special project on time for a customer
d. an employee receives a pay raise based on his or her extraordinary contributions to the firm
e. a manager is rewarded because the employees in his or her department had no accidents for a year

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Solution Preview

Question 11
A company had beginning retained earnings $63,100. During the year, the company reported sales $127,800, costs of goods sold $89,900, depreciation $11,200, dividends $28,000, and interest expenses $3,400. The tax rate is 35%. What is the retained earnings balance at the end of the year?
a. $50,245
b. $76,425
c. $68,455
d. $75,445
e. $53,615

We first calculate the net income
Sales 127,800
Costs 89,900
Depreciation 11,200
Interest 3,400
Total Expenses 104,500
Income before tax 23,300
Tax (35%) 8,155
Net Income 15,145
Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends
= 63,100 + 15,145 - 2,800
= 75,445

Question 12
A company is considering remodeling a building which they own. The remodeling costs are estimated at $1,420,000. The building contains 75 rentals units. The company will increase the rent on each unit such that his total rental income increases by $400,000 a year for the next 5 years. At a discount rate 15%, what is the benefit of the remodeling project to the company?
a. -$32,145.91
b. -$46,767.61
c. -$49,922.17
d. -$79,137.96
e. -$76,824.57

The benefit is = 400,000 X PVIFA (5,15%) - 1,420,000
= 1,340,862.04-1,420,000
= -79,137.96

Question 13
A company is investing $259,000 in a new project. The firm expects the project will produce cash flow $50,000 a year for the first two years, and $80,000 a year for the following three years. How long will it take the ...

Solution Summary

The solution explains various multiple choice questions relating to retained earnings, interest rates, dividends, exchange rates and arbitrage

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See Also This Related BrainMass Solution

Amino acids multiple choice questions

Which statement is incorrect about the classification of amino acids?
a. Alanine and valine are neutral, nonpolar amino acids.
b. Lysine and arginine are basic amino acids.
c. Tryptophan and phenylalanine are aromatic amino acids.
d. Aspartic acid and aspargine are acidic amino acids.

Which of the following amino acids is the least water soluble at pH 7.0?
a. Tryptophan
b. Glutamic acid
c. Cysteine
d. Histidine

Which amino acid would migrate the furthest toward the anode (positive electrode) during paper electrophoresis at pH 7.0?
a. Aspartic acid
b. Alanine
c. Lysin
d. Glutamine

Which of the following functional groups, attached to an inert matrix, could function as a cation exchanger?
a. Diethylaminoethyl-
b. p-aminobenzyl-
c. Carboxymethyl-
d. Trimethylammonium-

Which of the following amino acids would make the best buffer at pH 4.5?
a. Histidine
b. Alanine
c. Glutamine
d. Aspartic acid

Which fact is incorrect about stereoisomers?
a. A diastereomer is a nonsuperimposable non-mirror image.
b. An enantiomer is a nonsuperimposible mirror image.
c. Diastereomers have different melting points.
d. Diastereomers rotate plane polarized light in equal but opposite direction.

Which statement is incorrect about L-isoleucine?
a. Its enantiomer is named O-isoleucine.
b. It contains a total of two asymmetric or chiral carbons.
c. It can also be named as (28, 38)-isoleucine using the (R,8) system.
d. Its diastereomer would be named O-alloisoleucine.

An isoelectric amino acid was dissolved in water and the resulting pH was approximately 7.6. What amino acid would possess this property?
a. Alanine
b. Glutamic acid
c. Histidine
d. Lysine

What volume of NaOH is required to adjust the solution of monosodium aspartate to pH 9.8?
a. 1 ml
b. 2 ml
c. 3 ml
d. 6 ml or more

What volume of 2 N Hel is required to completely titrate the 4 mmol of monosodium aspartate?
a. 2 ml
b. 3ml
c. Aml
d. 6 ml or more

Which statement is correct about the peptide ala-ser?
a. Alanine is at the N-terminal of the peptide.
b. There are a total six atoms that lie in the plane of the peptide bond linking alanine to serine.
c. The alpha-carbon of alanine is sp3 hybridized d All the above are correct statements.

What is the product formed from the acid hydrolysis of a simple amide?
a. Acid & base
b. Aldehyde & alcohol
c. Acid & amine
d. Ester & alcohol

The complete acid hydrolysis of the peptide ala-gln-trp-ser would yield:
a. Ala, gin, trp, ser
b. Ala, glu, ser
c. Ala, glu, trp, ser
d. Ala. ser

Fibrous proteins, such as collagen, have which of the following properties?
a. Highly soluble in water
b. Their hydrophilic residues are directed into the interior of the protein
c. Exhibit enzymatic activity
d. Serve structural roles in the cell

Quaternary structure is associated with:
a. The overall shape of a polypeptide chain
b. The sum of the secondary and tertiary interactions
c. Simple proteins with only one subunit
d. The relative orientation of one polypeptide to another polypeptide in a multi-subunit protein.

The information needed to define the structure of a protein is essentially contained in:
a. Amino acid composition
b. Amino acid sequence
c. Secondary structure
d. Tertiary structure.

Insulin is a polypeptide hormone that contains two short polypeptide chains linked by two interstrand disulfide bonds. The most logical order of events to perform in order to sequence this protein would be:
A: The peptides are reduced with mercaptoethanol.
B: The peptides are sequenced using Edman chemistry .
C: The peptides are separated by chromatography techniques. 0: The peptides are alkylated with iodoacetamide.
a. A, D,C, B b.C,A, 0, B
c. C, B, A, 0
d. A, B, C, 0

Which statement is incorrect about the peptide val-asp-trp-asn-ser?
a. This peptide would show a strong absorption band at 280 nm.
b. Reaction with chymotrypsin would yield two peptides.
c. To synthesize this peptide using the solid phase method of Merrifield, the amino acid directly attached to the resin would be serine.
d. After the second round of Edman chemistry using the reagent PITC, the PTH -amino acid residue released would be PTH-asn.

Which statement is incorrect about the reaction of the peptide ser-Iys-asp-trp-cys-metasn-phe-ala with the following reagents?
a. Reaction with cyanogens bromide would yield two peptides.
b. Reaction with trypsin would result in three peptides. The smallest of three peptides would have the highest pi of the three.
c. Reaciton with chymotrypsin would result in the peptides ser-Iys-asp & try-cys-met-Iysasn-phe-ala .
d. Reaction with chymotrypsin would yield a different set of peptides that overlap those obtained with tryspsin

Determine the amino acid sequence of the following oligopeptide from the experimental data below:
The amino acid composition is found the be ala, Iys, phe, met, cys plus some
decompsition products.
2. The peptide has a molecular weight around 700 Da and absorbs at 280 nm.
3. Treatment with carboxypeptidase results in tryptophan and a peptide.
4. CNBr treatment yields a tetrapeptide and a dipeptide.
5. Trypsine digestion produces an amino acid and a pentapeptide with met on the amino end.
6. Chymotrypsin digestion yields a dipeptide and a tetrapeptide.
a. trp-Iys-met-cys-met-ala
b. Iys-met-cys-phe-ala-trp
c. trp-ala-phe-cys-met-Iys
d. Iys-ala-cys-phe-met -trp

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