{"id":93671,"date":"2022-03-26T02:02:55","date_gmt":"2022-03-26T02:02:55","guid":{"rendered":"https:\/\/papersspot.com\/blog\/?p=93671"},"modified":"2022-03-26T02:02:55","modified_gmt":"2022-03-26T02:02:55","slug":"fin-405-takehome-exam","status":"publish","type":"post","link":"https:\/\/papersspot.com\/blog\/2022\/03\/26\/fin-405-takehome-exam\/","title":{"rendered":"FIN 405 Takehome Exam"},"content":{"rendered":"

QUESTION 1<\/strong><\/p>\n

For the next fiscal year, you forecast net income of $50,000 and ending assets of $500,000. Your firm\u2019s payout ratio is 20%. Your beginning stockholders\u2019 equity is $300,000, beginning debt is $100,000 and your beginning total liabilities are $120,000. Your non-debt liabilities such as accounts payable are forecasted to increase by $10,000.\u00a0\u00a0What is your net new financing needed for next year?<\/p>\n\n\n\n\n\n\n\n
<\/td>\nA.<\/td>\n$80,000<\/td>\n<\/tr>\n
<\/td>\nB.<\/td>\n$30,000<\/td>\n<\/tr>\n
<\/td>\nC.<\/td>\n$40,000<\/td>\n<\/tr>\n
<\/td>\nD.<\/td>\n$50,000<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

QUESTION 2<\/strong><\/p>\n

For the next fiscal year, you forecast net income of $50,000 and ending assets of $500,000. Your firm\u2019s payout ratio is 20%. Your beginning stockholders\u2019 equity is $300,000, beginning debt is $100,000 and your beginning total liabilities are $120,000. Your non-debt liabilities such as accounts payable are forecasted to increase by $10,000.<\/p>\n

What amount of new equity would you need to issue to cover the net new financing need in order to keep your debt-equity ratio constant?<\/p>\n\n\n\n\n\n\n
<\/td>\nA.<\/td>\n$2,500<\/td>\n<\/tr>\n
<\/td>\nB.<\/td>\n$12,500<\/td>\n<\/tr>\n
<\/td>\nC.<\/td>\n$52,500<\/td>\n<\/tr>\n
<\/td>\nD.<\/td>\n$352,500<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

QUESTION 3<\/strong><\/p>\n

Eagle Sports, Inc. had net income of $600,000 in 2018. The firm paid a dividend of $120,000.\u00a0 Initial total assets were $10,000,000, of which $6,000,000 was financed by equity. What is Eagle\u2019s sustainable growth rate?<\/p>\n\n\n\n\n\n\n\n
<\/td>\nA.<\/td>\n10%<\/td>\n<\/tr>\n
<\/td>\nB.<\/td>\n8%<\/td>\n<\/tr>\n
<\/td>\nC.<\/td>\n12%<\/td>\n<\/tr>\n
<\/td>\nD.<\/td>\n20%<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

QUESTION 4<\/strong><\/p>\n

Eagle Sports Company (ESC) had net income of $6 million on sales of $50 million last year.\u00a0 The firm paid a dividend of $1.2 million.\u00a0 Total assets were $120 million, of which $40 million was financed by debt.\u00a0 ESC has no spare capacity.\u00a0 The firm\u2019s financial planners forecast that total sales next year will increase by 10% from this year\u2019s level.\u00a0 If ESC chooses not to issue new shares of stocks and maintains a 1\/2 debt-to-equity ratio, how much new debt will be issued?<\/p>\n\n\n\n\n\n\n
<\/td>\nA.<\/td>\n$4 million<\/td>\n<\/tr>\n
<\/td>\nB.<\/td>\n$6 million<\/td>\n<\/tr>\n
<\/td>\nC.<\/td>\n$8 million<\/td>\n<\/tr>\n
<\/td>\nD.<\/td>\n$10 million<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

QUESTION 5<\/strong><\/p>\n

During the year the following changes were observed.<\/p>\n

    \n
  • \n
      \n
    • Inventory period increased by 10 days.<\/li>\n
    • Receivables period decreased by 5 days.<\/li>\n
    • Accounts payable period increased by 7 days.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n

      What is the net change in cash conversion cycle?<\/p>\n\n\n\n\n\n\n\n
      <\/td>\nA.<\/td>\n+2 days<\/td>\n<\/tr>\n
      <\/td>\nB.<\/td>\n+12 days<\/td>\n<\/tr>\n
      <\/td>\nC.<\/td>\n-2 days<\/td>\n<\/tr>\n
      <\/td>\nD.<\/td>\n+10 days<\/td>\n<\/tr>\n
      <\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      QUESTION 6<\/strong><\/p>\n

      A firm offers its customers 3\/5 net 25. What is the cost of trade credit to a customer who chooses to pay on day 25?<\/p>\n\n\n\n\n\n\n\n
      <\/td>\nA.<\/td>\n65.5%<\/td>\n<\/tr>\n
      <\/td>\nB.<\/td>\n74.3%<\/td>\n<\/tr>\n
      <\/td>\nC.<\/td>\n32.3%<\/td>\n<\/tr>\n
      <\/td>\nD.<\/td>\n68.4%<\/td>\n<\/tr>\n
      <\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      QUESTION 7<\/strong><\/p>\n

      The quarterly working capital levels for Hasbeen Toys are presented in the following table (in $ thousands):<\/p>\n

      Quarter\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a02\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a03\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a04<\/p>\n

      Cash\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0$ 800 \u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0800 \u00a0\u00a0\u00a0 \u00a0\u00a0800\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0800<\/p>\n

      Accounts Receivable\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,400 \u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0800 \u00a0\u00a0\u00a0 \u00a0\u00a0700\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a03,700<\/p>\n

      Inventory\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,100 \u00a0\u00a0\u00a0 3,100 \u00a0\u00a0\u00a0 5,100 \u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0550<\/p>\n

      Accounts Payable\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0600\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 600 \u00a0\u00a0\u00a0 \u00a0\u00a0600\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0600<\/p>\n

      What are Hasbeen Toy’s temporary working capital requirements in the third quarter?<\/p>\n\n\n\n\n\n\n\n
      <\/td>\nA.<\/td>\n$5,450,000<\/td>\n<\/tr>\n
      <\/td>\nB.<\/td>\n$3,300,000<\/td>\n<\/tr>\n
      <\/td>\nC.<\/td>\n$2,700,000<\/td>\n<\/tr>\n
      <\/td>\nD.<\/td>\n$6,100,000<\/td>\n<\/tr>\n
      <\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      QUESTION 8<\/strong><\/p>\n

      Sun Prairie Traders borrowed $100,000 at an APR of 4.5 percent for 3 months.\u00a0 The loan called for a compensating balance of 10 percent.\u00a0 What is the effective interest rate (EAR) on the loan?<\/p>\n\n\n\n\n\n\n
      <\/td>\nA.<\/td>\n5.00%<\/td>\n<\/tr>\n
      <\/td>\nB.<\/td>\n5.09%<\/td>\n<\/tr>\n
      <\/td>\nC.<\/td>\n4.50%<\/td>\n<\/tr>\n
      <\/td>\nD.<\/td>\n1.25%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      QUESTION 9<\/strong><\/p>\n

      Gibbs, Inc., has just set up a formal line of credit of $1 million with First National Bank. The line of credit is good for up to five years. The bank will be charging them an interest rate of 6 percent on the loan, and in addition the firm will pay an annual fee of 40 basis points on the unused balance. The firm borrowed $800,000 on the first day the credit line became available. What is the firm\u2019s effective interest rate on this line of credit?<\/p>\n\n\n\n\n\n\n\n
      <\/td>\nA.<\/td>\n4.88%<\/td>\n<\/tr>\n
      <\/td>\nB.<\/td>\n6.10%<\/td>\n<\/tr>\n
      <\/td>\nC.<\/td>\n6.04%<\/td>\n<\/tr>\n
      <\/td>\nD.<\/td>\n6.40%<\/td>\n<\/tr>\n
      <\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      QUESTION 10<\/strong><\/p>\n

      Sun Prairie Traders borrowed $300,000 at an APR of 1.7 percent for 3 months.\u00a0 The loan called for a compensating balance of 15 percent.\u00a0 What is the effective interest rate (EAR) on the loan?<\/p>\n\n\n\n\n\n\n
      <\/td>\nA.<\/td>\n2.0151%<\/td>\n<\/tr>\n
      <\/td>\nB.<\/td>\n2.0134%<\/td>\n<\/tr>\n
      <\/td>\nC.<\/td>\n2.0000%<\/td>\n<\/tr>\n
      <\/td>\nD.<\/td>\n1.7000%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

       <\/p>\n","protected":false},"excerpt":{"rendered":"

      QUESTION 1 For the next fiscal year, you forecast net income of $50,000 and ending assets of $500,000. Your firm\u2019s payout ratio is 20%. Your beginning stockholders\u2019 equity is $300,000, beginning debt is $100,000 and your beginning total liabilities are $120,000. Your non-debt liabilities such as accounts payable are forecasted to increase by $10,000.\u00a0\u00a0What is […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-93671","post","type-post","status-publish","format-standard","hentry","category-research-paper-writing"],"_links":{"self":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/93671","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/comments?post=93671"}],"version-history":[{"count":1,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/93671\/revisions"}],"predecessor-version":[{"id":93672,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/93671\/revisions\/93672"}],"wp:attachment":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/media?parent=93671"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/categories?post=93671"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/tags?post=93671"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}