Your firm has the following income statement items: sales of $50,250,000; income tax of $1,744,000; operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense of $750,000. What is the amount of the firm's income before tax? 3) _______

A) $750,000 B) $4,360,000 C) $25,115,000 D) $10,865,000

Other things held constant, an increase in ________ will decrease the current ratio. Assume an initial current ratio greater than 1.0. 6) _______
A) common stock B) accruals
C) average collection period D) cash

Considering each action independently and holding other things constant, which of the following actions would increase a firm's discretionary financing needed (the need for additional capital)? 7) _______
A) A decrease in the firm's tax rate
B) A decrease in the firm's accounts receivable average collection period
C) A decrease in the expected growth rate in sales
D) An increase in the firm's profit margin
E) A decrease in the firm's inventory turnover

Which of the following has a beta of zero? 10) ______
A) A high-risk asset B) A risk-free asset
C) The market D) Both A and B

Millers Metalworks, Inc. has a total asset turnover of 2.5 and a net profit margin of 3.5%. The total debt ratio for the firm is 50%. Calculate Millers's return on equity. 16) ______
A) 19.5% B) 23.5% C) 17.5% D) 21.5%

) Your firm is trying to determine its cash disbursements for the next two months (June and July). In any month, the firm makes purchases of 60% of that month's sales, which are paid the following month. In addition, the firm incurs the following costs every month and pays for them in the month the expenses are incurred: wages/salaries of $10,000, rent of $4,000, and miscellaneous cash expenses of $1,000. Depreciation amortized on a monthly basis is $2,000. June's sales are expected to be $100,000, and July's sales are expected to be $150,000. Cash disbursements for the month of July are expected to be: 17) ______
A) $105,000. B) $75,000. C) $77,000. D) $107,000.

) Gina Dare, who wants to be a millionaire, plans to retire at the end of 40 years. Gina's plan is to invest her money by depositing into an IRA at the end of every year. What is the amount that she needs to deposit annually in order to accumulate $1,000,000? Assume that the account will earn an annual rate of 11.5%. Round off to the nearest $1. 18) ______
A) $1,497 B) $3,622 C) $75 D) $5,281

) A stock with a beta greater than 1.0 has returns that are ________ volatile than the market, and a stock with a beta of less than 1.0 exhibits returns which are ________ volatile than those of the market portfolio. 19) ______
A) less, more B) more, more
C) more, less D) less, less

Mayhem Mines, Inc. is analyzing a project that has a profitability index of 2.5. Given the following cash flows for the project, calculate the present value of inflows for the project.
Year Cash Flow
0 ($100,000)
1 $120,000
2 $130,000
3 $200,000 22) ______
A) $450,000 B) $350,000 C) $250,000 D) $550,000

Lorna Dome, Inc. has an annual interest expense of $30,000. Lorna Dome's times-interest-earned ratio is 4.2. What is Lorna Dome's operating income? 25) ______
A) $57,600 B) $57,000 C) $126,000 D) $96,000

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Your firm has the following income statement items: sales of $50,250,000; income tax of $1,744,000; operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense of $750,000. What is the amount of the firm's income before tax? 3) _______

A) $750,000

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To answer the questions, I will break down each problem and explain how to arrive at the answer.

1) The amount of the firm's income before tax can be calculated by subtracting the operating expenses, cost of goods sold, and interest expense from the sales:
Income before tax = Sales - Operating expenses - Cost of goods sold - Interest expense
= $50,250,000 - $10,115,000 - $35,025,000 - $750,000
= $4,360,000

Therefore, the answer is option B) $4,360,000.

2) An increase in cash will decrease the current ratio.
Therefore, the answer is option D) cash.

3) The action that would increase a firm's discretionary financing needed (the need for additional capital) is a decrease in the firm's inventory turnover.
Therefore, the answer is option E) a decrease in the firm's inventory turnover.

4) A risk-free asset has a beta of zero.
Therefore, the answer is option B) A risk-free asset.

5) The return on equity can be calculated using the formula:
Return on Equity = Net Profit Margin x Total Asset Turnover x Total Debt Ratio
= 3.5% x 2.5 x (1 - 50%)
= 3.5% x 2.5 x 0.5
= 8.75%

Therefore, the answer is not provided in the options.

6) To calculate the cash disbursements for the month of July, we need to consider the purchases made in June, as well as the monthly costs incurred in July:
Cash disbursements = Purchases + Monthly Costs
= 60% of June's sales + Wages/Salaries + Rent + Miscellaneous cash expenses + Depreciation
= 0.6 x $100,000 + $10,000 + $4,000 + $1,000 + $2,000
= $60,000 + $10,000 + $4,000 + $1,000 + $2,000
= $77,000

Therefore, the answer is option C) $77,000.

7) To calculate the amount Gina needs to deposit annually to accumulate $1,000,000, we can use the formula for the present value of annuity:
Deposit = (Future Value / Present Value Factor of Annuity)
= $1,000,000 / (1 + 0.115)^40 - 1) / 0.115
= $1,000,000 / (1.115^40 - 1) / 0.115
= $1,000,000 / (90.3698 - 1) / 0.115
= $1,000,000 / 89.3698 / 0.115
≈ $5,281

Therefore, the answer is option D) $5,281.

8) A stock with a beta greater than 1.0 has returns that are more volatile than the market, and a stock with a beta of less than 1.0 exhibits returns that are less volatile than those of the market portfolio.
Therefore, the answer is option B) more, more.

9) The present value of inflows for the project can be calculated by discounting each cash flow at the appropriate rate and summing them up:
Present value of inflows = $120,000 / (1 + r)^1 + $130,000 / (1 + r)^2 + $200,000 / (1 + r)^3
Using the profitability index, we know that the initial investment is ($100,000), which means that the present value of inflows is ($100,000) x 2.5 = $250,000.

Therefore, the answer is option C) $250,000.

10) The operating income can be calculated by multiplying the times-interest-earned ratio by the interest expense:
Operating income = Times-interest-earned ratio x Interest expense
= 4.2 x $30,000
= $126,000

Therefore, the answer is option C) $126,000.

I hope this explanation helps!