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INSTRUCTIONS-READ FIRST! FIN201 Spring 2021 Exam 1 1. I understand that this is an examination and attest that the work presented is my own; that it is done without outside assistance of any kind (except that permitted by the instructor). I understand that the penalty for cheating or collusion of any kind could include all of the sanctions for a violation of the Bryant Honor Code up to an including a grade of F for the course. 2. Immediately save this downloaded file. The file name should contain both your name and section. For example, if you’re in the 12:45 p.m. section (Section C), your file name should be in this format: LastName.FirstName.C.Exam1.xlsx. Students in the 2:20 p.m. section will use LastName.FirstName.G.Exam1.xlsx 3. READ. EVERY. QUESTION. CAREFULLY. 4. There are 20 questions and each question is worth 5 points for a maximum score of 100 points. 5. You may use any materials from this course for references, including the text book, PowerPoint slides, Excel spreadsheet exercises, and your personal notes. You MAY NOT go online or contact or communicate with any other person or souce of information. 6. You may use any form of calculation that you wish: Financial calculator, Excel formulas and functions, Mathematical formulas 7. This exam will be full remote on Zoom. All students are required to have their webcams focused on their faces throughout the exam period. 8. I understand that the due date and time for the exam is Tuesday, March 16th at the end of class. I understand that the exam must be submitted electronically. I understand that exams passed in after that time will be considered late and will incur a minimum penalty of 1 point lost per minute. 9. It is sound practice to save your file frequently during the course of the exam just in case your computer crashes. 10. You may ask questions during the exam by Zoom private chat, email to me at
[email protected] or by text to 203-249-0243 11. When your are finished, save your file and email it as an attachment to me at
[email protected] 12. I reserve the right to extend the due time. 13. Good luck! Questions 1-5 There are five questions on this sheet. You may use any empty space to the right for calculations that you may need. Mark all answers with an X or the caclulated answer in the correct box., Note that the color that appears is formatted to provide easier visibility during grading and is not an indication that the answer is right or wrong. Question 1Which of the following statements is CORRECT? a. The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods. b. If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity. c. The cash flows for an annuity due must all occur at the beginning of the periods. d. The cash flows for an annuity may vary from period to period, but they must occur at regular intervals, such as once a year or once a month. e. If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity. 2Which of the following statements is NOT CORRECT? a. When a corporation's shares are owned by a few individuals, we say that the firm is "closely, or privately, held." b. "Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares. c. The stock of publicly owned companies must generally be registered with and reported to a regulatory agency such as the SEC. d. When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public, or an IPO," and the market for such stock is called the new issue or IPO market. e. It is possible for a firm to go public and yet not raise any additional new capital for the firm itself. 3Which of the following factors would explain how a company's cash balance could have increased even though the company had a negative cash flow from operations last year? a. The company sold a new issue of bonds b. The company made a large investment in new fixed assets c. The company paid a large dividend d. The company had high depreciation expenses e. The company repurchased 20% of its common stock 4How much would $5,000 due in 15 years be worth today if the discount rate was 5.5%? a. $2,351.65 b. $2,239.67 c. $2,441.24 d. $2,530.82 e. $1,858.92 5Suppose the U.S. Treasury offers to sell you a bond for $687.25. The bond pays no interest before maturity, at which time the bond will be redeemed in 5 years for $1,000.00. What interest rate would you earn if you bought this bond at the offer price? a. 8.80% b. 6.93% c. 6.70% d. 7.48% e. 7.79% Questions 6-10 There are five questions on this sheet. You may use any empty space to the right for calculations that you may need. Mark all answers with an X or the calculated answer in the correct box., Note that the color that appears is formatted to provide easier visibility during grading and is not an indication that the answer is right or wrong. Question 6The formula for calculating Net Operating Working Capital ("NOWC") is a. Current Assets - Current Liabilities b. Current Assets - Excess Cash - (Current Liabilities - Current Interest Bearing Debt) c. Current Assets - Cash +(Current Liabilities - Current Interest Bearing Debt) d. Non-cash Current Assets + Cash - Current Liabilities 7Which of the following statements is CORRECT? a. The four most important financial statements provided in the annual report are the Balance Sheet, Income Statement, Cash Budget, and the Statement of Stockholders' Equity b. The Balance Sheet presents a picture of the firm's financial position at a point in time. c. The Income Statement proesents a picture of the firm's financial position at a point in time. d. The Statement of Cash Flows tells us how much cash the firm must pay out in interest during the year. e. The Statement of Cash Flows tells us how much cash the firm will require during some future period, generally a month or a year. 8Below are the 2018 and 2019 year-end Balance Sheets for Bulldog Enterprises Assets:20192018 Cash$200,000$170,000 Accounts receivable864,000700,000 Inventories2,000,0001,400,000 Total current assets$3,064,000$2,270,000 Net fixed assets6,000,0005,600,000 Total assets$9,064,000$7,870,000 Liabilities and Equity Accounts payable$1,400,000$1,090,000 Notes payable to bank1,600,0001,800,000 Total current liabilities$3,000,000$2,890,000 Long-term debt2,400,0002,400,000 Common stock3,000,0002,000,000 Retained earnings664,000580,000 Total common equity$3,664,000$2,580,000 Total liabilities and equity$9,064,000$7,870,000 The firm has never paid a dividend on its common stock, and It issued $2,400,000 of 10 year, non-callable, long term debt in 2018. At the end of 2019, none of the principal on the debt had been repaid. Assume that the company's sales in 2018 and 2019 were the same. Which of the following statements must be CORRECT? a. The company increased its short term bank debt in 2019 b. The firm issued long term debt in 2019 c. The company issued new common stock in 2019 d. The company repurchased some common stock in 2019 e. The company had negative Net Income in 2018 9Assume that Bulldog Enterprises made Net Income of $150,000 in 2019 2019 What was Bulldog Enterprises' Return on Assets? What was Bulldog Enterprises' Return on Equity? Note: Provide your answer in % with two significant digits 10What are the following financial measures of Bulldog Enterprises as of 2019? Current Ratio Quick Ratio Questions 11-15 There are five questions on this sheet, all referring to Akamai Technologies. You may use any empty space to the right for calculations that you may need. Mark all answers with an X or the calculated answer in the correct box., Note that the color that appears is formatted to provide easier visibility during grading and is not an indication that the answer is right or wrong. Question The Balance Sheets for Akamai Technologies in 2018 and 2019 is shown below Balance Sheet Balance Sheet as of: Dec-31-2018Dec-31-2019 CurrencyUSD millionsUSD millions ASSETS Cash And Equivalents1,892.21,537.0 Total Cash & Equivalents1,892.11,537.0 Accounts Receivable479.9551.9 Total Receivables479.9551.9 Prepaid Exp.55.553.9 Inventories107.988.8 Total Current Assets2,535.42,231.6 Gross Property, Plant & Equipment2,587.83,789.5 Accumulated Depreciation(1,677.2)(1,878.9) Net Property, Plant & Equipment910.61,910.6 Long-term Investments209.1870.1 Goodwill1,487.41,600.3 Other Intangibles168.3179.4 Deferred Tax Assets, LT34.976.5 Deferred Charges, LT26.325.7 Other Long-Term Assets89.7112.7 Total Assets5,461.87,006.9 LIABILITIES Accounts Payable99.1138.9 Accrued Exp.291.8294.5 Curr. Port. of LT Debt686.6- Curr. Port. of Leases-139.5 Curr. Income Taxes Payable36.540.3 Unearned Revenue, Current69.171.2 Other Current Liabilities27.78.8 Total Current Liabilities1,210.7693.3 Long-Term Debt874.11,839.8 Long-Term Leases-692.2 Unearned Revenue, Non-Current4.64.4 Def. Tax Liability, Non-Curr.19.629.2 Other Non-Current Liabilities160.990.1 Total Liabilities2,269.93,348.9 Common Stock1.61.6 Additional Paid In Capital3,670.03,653.5 Retained Earnings(430.9)48.0 Treasury Stock-- Comprehensive Inc. and Other(48.9)(45.1) Total Common Equity3,191.93,658.0 Total Equity3,191.93,658.0 Total Liabilities And Equity5,461.87,006.9 20182019 11Calculate NOWC for 2018 and 2019. (Assume no excess cash) 12Was the change in NOWC between 2018 and 2019 a Source or a Use of Funds? 13If the Market Value of the Equity (i.e. Market Capitalization) of Akamai Technologies as of December 31, 2019 was $14,082.0 in millions of US Dollars, what is Akamai's Market Value Added (MVA) as of that date? 14What is the Total Invested Capital of Akamai Industries as of December 31, 2019? (Assume that current and