Steve, the sales manager for TL Products, wants to sponsor a one-week "Customer Appreciation Sale" where the firm offers

Steve, the sales manager for TL Products, wants to sponsor a one-week "Customer Appreciation Sale" where the firm offers to sell additional units of a product at the lowest price possible without negatively affecting the firm's profits. Which one of the following represents the price that should be charged for the additional units during this sale?    A.  average variable cost B.  average total cost C.  average total revenue D.  marginal revenue E.  marginal cost Refer to section 11.3

36.

The president of Global Wholesalers would like to offer special sale prices to the firm's best customers under the following terms: 1. The prices will apply only to units purchased in excess of the quantity normally purchased by a customer. 2. The units purchased must be paid for in cash at the time of sale. 3. The total quantity sold under these terms cannot exceed the excess capacity of the firm. 4. The net profit of the firm should not be affected. 5. The prices will be in effect for one week only. Given these conditions, the special sale price should be set equal to the:    A.  average variable cost of materials only. B.  average cost of all variable inputs. C.  sensitivity value of the variable costs. D.  marginal cost of materials only. E.  marginal cost of all variable inputs. Refer to section 11.3

37.

The contribution margin per unit is equal to the:    A.  sales price per unit minus the total costs per unit. B.  variable cost per unit minus the fixed cost per unit. C.  sales price per unit minus the variable cost per unit. D.  pre-tax profit per unit. E.  aftertax profit per unit. Refer to section 11.3

Steve is fairly cautious when analyzing a new project and thus he projects the most optimistic

The procedure of allocating a fixed amount of funds for capital spending to each business unit is called:    A.  marginal spending. B.  capital preservation. C.  soft rationing. D.  hard rationing. E.  marginal rationing. Refer to section 11.6

16.	PC Enterprises wants to commence a new project but is unable to obtain the financing under any circumstances. This firm is facing:    A.  financial deferral. B.  financial allocation. C.  capital allocation. D.  marginal rationing. E.  hard rationing. Refer to section 11.6

17.

Forecasting risk emphasizes the point that the correctness of any decision to accept or reject a project is highly dependent upon the:    A.  method of analysis used to make the decision. B.  initial cash outflow. C.  ability to recoup any investment in net working capital. D.  accuracy of the projected cash flows. E.  length of the project. Refer to section 11.1

18.

Steve is fairly cautious when analyzing a new project and thus he projects the most optimistic, the most realistic, and the most pessimistic outcome that can reasonably be expected. Which type of analysis is Steve using?    A.  simulation testing B.  sensitivity analysis C.  break-even analysis D.  rationing analysis E.  scenario analysis Refer to section 11.2

Steve purchased 300 shares of Alpha Beta stock on May 9. On May 15, he purchased another 300 shares

55.

Steve purchased 300 shares of Alpha Beta stock on May 9. On May 15, he purchased another 300 shares and then on May 22 he purchased a final 400 shares of Alpha Beta stock. The company declared a dividend of $1.60 a share on April 30 to holders of record on Friday, May 23. The dividend is payable on June 2. How much dividend income will Steve receive on June 2 from Alpha Beta?    A.  $0 B.  $480 C.  $960 D.  $1,200 E.  $1,600 Dividend received = $1.60(300 + 300) = $960

56.

On July 7, you purchased 500 shares of Wagoneer, Inc. stock for $21 a share. On August 1, you sold 200 shares of this stock for $28 a share. You sold an additional 100 shares on August 17 at a price of $25 a share. The company declared a $0.95 per share dividend on August 4 to holders of record as of Wednesday, August 15. This dividend is payable on September 1. How much dividend income will you receive on September 1 as a result of your ownership of Wagoneer stock?    A.  $0 B.  $190 C.  $285 D.  $360 E.  $475 Dividend received = $0.95 × (500 - 200) = $285

57.

Webster United is paying a $1.10 per share dividend today. There are 350,000 shares outstanding with a market price of $25 per share. Ignore taxes. Before the dividend, the company had earnings per share of $1.74. As a result of this dividend, the:    A.  retained earnings will decrease by $350,000. B.  retained earnings will increase by $385,000. C.  total firm value will not change. D.  earnings per share will increase to $2.84. E.  price-earnings ratio will be 13.74. Price-earnings ratio after the dividend = ($25 - $1.10)/$1.74 = 13.74

Tracy invested $1,000 five years ago and earns 4 percent interest on her investment

1.	You are investing $100 today in a savings account at your local bank. Which one of the following terms refers to the value of this investment one year from now?    A.  future value B.  present value C.  principal amounts D.  discounted value E.  invested principal

2.

Tracy invested $1,000 five years ago and earns 4 percent interest on her investment. By leaving her interest earnings in her account, she increases the amount of interest she earns each year. The way she is handling her interest income is referred to as which one of the following?    A.  simplifying B.  compounding C.  aggregation D.  accumulation E.  discounting

3.

Steve invested $100 two years ago at 10 percent interest. The first year, he earned $10 interest on his $100 investment. He reinvested the $10. The second year, he earned $11 interest on his $110 investment. The extra $1 he earned in interest the second year is referred to as:    A.  free interest. B.  bonus income. C.  simple interest. D.  interest on interest. E.  present value interest.

4.	Interest earned on both the initial principal and the interest reinvested from prior periods is called:    A.  free interest. B.  dual interest. C.  simple interest. D.  interest on interest. E.  compound interest.