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...

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 XXXXXXXXXX or by text to XXXXXXXXXX
11. When your are finished, save your file and email it as an attachment to me at XXXXXXXXXX
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 co
ect 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
    1    Which of the following statements is CORRECT?
        a. The cash flows for an ordinary (or defe
ed) 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.
    2    Which 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.
    3    Which 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
    4    How 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
    5    Suppose the U.S. Treasury offers to sell you a bond for $ XXXXXXXXXXThe bond pays no interest before maturity, at which time the bond will be redeemed in 5 years for $1, XXXXXXXXXXWhat 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 co
ect 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
    6    The formula for calculating Net Operating Working Capital ("NOWC") is
        a. Cu
ent Assets - Cu
ent Liabilities
        b. Cu
ent Assets - Excess Cash - (Cu
ent Liabilities - Cu
ent Interest Bearing Debt)
        c. Cu
ent Assets - Cash +(Cu
ent Liabilities - Cu
ent Interest Bearing Debt)
        d. Non-cash Cu
ent Assets + Cash - Cu
ent Liabilities
    7    Which 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.
    8    Below are the 2018 and 2019 year-end Balance Sheets for Bulldog Enterprises
        Assets:    2019        2018
        Cash    $200,000        $170,000
        Accounts receivable    864,000        700,000
        Inventories    2,000,000        1,400,000
        Total cu
ent assets    $3,064,000        $2,270,000
        Net fixed assets    6,000,000        5,600,000
        Total assets    $9,064,000        $7,870,000
        Liabilities and Equity
        Accounts payable    $1,400,000        $1,090,000
        Notes payable to bank    1,600,000        1,800,000
        Total cu
ent liabilities    $3,000,000        $2,890,000
        Long-term debt    2,400,000        2,400,000
        Common stock    3,000,000        2,000,000
        Retained earnings    664,000        580,000
        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 XXXXXXXXXXAt 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
    9    Assume 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
    10    What are the following financial measures of Bulldog Enterprises as of 2019?
        Cu
ent Ratio
        Quick Ratio
Questions 11-15
        There are five questions on this sheet, all refe
ing 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 co
ect 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 XXXXXXXXXX        Dec XXXXXXXXXX
        Cu
ency    USD millions        USD millions
        ASSETS
        Cash And Equivalents    1,892.2        1,537.0
         Total Cash & Equivalents    1,892.1        1,537.0
        Accounts Receivable    479.9        551.9
         Total Receivables    479.9        551.9
        Prepaid Exp.    55.5        53.9
        Inventories    107.9        88.8
         Total Cu
ent Assets    2,535.4        2,231.6
        Gross Property, Plant & Equipment    2,587.8        3,789.5
        Accumulated Depreciation    (1,677.2)        (1,878.9)
         Net Property, Plant & Equipment    910.6        1,910.6
        Long-term Investments    209.1        870.1
        Goodwill    1,487.4        1,600.3
        Other Intangibles    168.3        179.4
        Defe
ed Tax Assets, LT    34.9        76.5
        Defe
ed Charges, LT    26.3        25.7
        Other Long-Term Assets    89.7        112.7
        Total Assets    5,461.8        7,006.9
        LIABILITIES
        Accounts Payable    99.1        138.9
        Accrued Exp.    291.8        294.5
        Cu
. Port. of LT Debt    686.6        -
        Cu
. Port. of Leases    -        139.5
        Cu
. Income Taxes Payable    36.5        40.3
        Unearned Revenue, Cu
ent    69.1        71.2
        Other Cu
ent Liabilities    27.7        8.8
         Total Cu
ent Liabilities    1,210.7        693.3
        Long-Term Debt    874.1        1,839.8
        Long-Term Leases    -        692.2
        Unearned Revenue, Non-Cu
ent    4.6        4.4
        Def. Tax Liability, Non-Cu
.    19.6        29.2
        Other Non-Cu
ent Liabilities    160.9        90.1
        Total Liabilities    2,269.9        3,348.9
        Common Stock    1.6        1.6
        Additional Paid In Capital    3,670.0        3,653.5
        Retained Earnings    (430.9)        48.0
        Treasury Stock    -        -
        Comprehensive Inc. and Other    (48.9)        (45.1)
         Total Common Equity    3,191.9        3,658.0
        Total Equity    3,191.9        3,658.0
        Total Liabilities And Equity    5,461.8        7,006.9
            2018        2019
    11    Calculate NOWC for 2018 and XXXXXXXXXXAssume no excess cash)
    12    Was the change in NOWC between 2018 and 2019 a Source or a Use of Funds?
    13    If 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?
    14    What is the Total Invested Capital of Akamai Industries as of December 31, 2019? (Assume that cu
ent and