Chapter 22:
Financial Management
1.
The Steakhouse had a gross income of $590,256 for the year. Deductions totaled $344,100. The federal corporate income tax for taxable income is as follows: For income over $100,000 but less than $335,000, the tax is $22,500 plus 39 percent of the amount over $100,000. What is the federal corporate income tax?
a.
$19,794.40
b.
$61,250.00
c.
$79,250.84
d.
$95,199.00
2.
M & P Grocery wants to open a new location. To finance the expansion, M & P plans to sell an issue of 100,000 shares of stock at $25 per share. The underwriting commission will be 5 percent of the value of the stocks. Accounting fees, legal fees, printing costs, and other expenses are estimated to be $67,000. If all the shares of stock are sold, what net proceeds will M & P receive?
a.
$192,000
b.
$564,387
c.
$124,897
d.
$2,308,000
3.
Mega Mulch borrowed $50,000 from its bank to pay for new equipment. The bank lent the money at 8 percent ordinary interest for 180 days. What is the maturity value of the loan?
a.
$52,000
b.
$54,000
c.
$56,000
d.
$58,000
4.
The financial manager of Chain Sawz decided to invest the company's surplus cash in a $50,000 U.S. Treasury bill for 180 days. The interest rate is 5 percent. The bank charges a service fee of $25 to obtain the Treasury bill. What is the cost of the Treasury bill?
a.
$48,725
b.
$48,750
c.
$48,775
d.
$48,800
5.
Ed's Appliances has a $100,000 cash surplus. Ed used the cash to invest in commercial paper (CP) issued by Mobile Electric at 6 percent for 60 days. The bank charges a service fee of $25. What is the cost of the CP?
a.
$93,975
b.
$94,025
c.
$98,975
d.
$99,025
6.
For M & P Grocery's expansion, it had the following growth expenses: land is $45,000; construction costs are $1,500,000; architect's fee is 6 percent of construction costs; surfacing parking lot is $4 per square foot for 40,000 square feet; legal fees are $15,000; equipment and fixtures are $225,000; and store stock is $80,000. What is the total cost of the the expansion?
a.
$2,035,000
b.
$2,115,000
c.
$2,106,000
d.
$2,146,500
7.
Cup o' Joe borrowed $20,000 from its bank to pay for new equipment. The bank lent the money at 6 percent ordinary interest for 90 days. What is the maturity value of the loan?
a.
$20,090
b.
$20,300
c.
$20,600
d.
$21,200
8.
The financial manager of National Auto Parts decided to invest the company's surplus cash in a $150,000 U.S. Treasury bill for 120 days. The interest rate is 6 percent. The bank charges a service fee of $50 to obtain the Treasury bill. What is the cost of the Treasury bill?
a.
$147,050
b.
$147,950
c.
$153,950
d.
$158,950
9.
Reel Records has a $150,000 cash surplus. The financial manager used the cash to invest in CP issued by American Electric at 6 percent for 90 days. The bank charges a service fee of $50. What is the cost of the CP?
a.
$147,650
b.
$147,800
c.
$152,250
d.
$158,950
10.
National Auto Parts wants to open a warehouse. To finance its expansion, National Auto Parts plans to sell an issue of 50,000 shares of stock at $25 per share. The underwriting commission will be 5 percent of the value of the stocks. Accounting fees, legal fees, printing costs, and other expenses are estimated to be $24,000. If all the shares of stock are sold, what net proceeds will National Auto Parts receive?
a.
$524,000
b.
$601,000
c.
$1,163,500
d.
$1,226,000
Ch. 1-5
Ch. 6-10
Ch. 11-15
Ch. 16-20
Ch. 21-23
Ch. 1
Ch. 2
Ch. 3
Ch. 4
Ch. 5
Ch. 6
Ch. 7
Ch. 8
Ch. 9
Ch. 10
Ch. 11
Ch. 12
Ch. 13
Ch. 14
Ch. 15
Ch. 16
Ch. 17
Ch. 18
Ch. 19
Ch. 20
Ch. 21
Ch. 22
Ch. 23
