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Practice Field Exam

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Submitted By xiaohaizi
Words 3072
Pages 13
Finance Practice Exam
Student: ____________________________________________________________

_______________
1. According to Generally Accepted Accounting Principles, costs are:
A. recorded as incurred.
B. recorded when paid.
C. matched with revenues.
D. matched with production levels.
E. expensed as management desires. 2. The financial ratio measured as total assets minus total equity, divided by total assets, is the:
A. total debt ratio.
B. equity multiplier.
C. debt-equity ratio.
D. current ratio.
E. times interest earned ratio. 3. Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are known as _____ ratios.
A. asset management
B. long-term solvency
C. short-term solvency
D. profitability
E. market value 4. What is the future value of the following cash flows at the end of year 3 if the interest rate is 7.25%? The cash flows occur at the end of each year. A. $8,758.04
B. $8,806.39
C. $10,073.99
D. $10,314.00
E. $10,804.36 \
5. The possibility that more than one discount rate will make the NPV of an investment equal to zero is called the _____ problem.
A. net present value profiling
B. operational ambiguity
C. mutually exclusive investment decision
D. issues of scale
E. multiple rates of return 6. The Liberty Co. is considering two projects. Project A consists of building a wholesale book outlet on lot #169 of the Englewood Retail Center. Project B consists of building a sit-down restaurant on lot #169 of the Englewood Retail Center. When trying to decide whether to build the book outlet or the restaurant, management should rely most heavily on the analysis results from the _____ method of analysis.
A. profitability index
B. internal rate of return
C. payback
D. net present value
E. accounting rate of return 7. A project which is designed to

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