FIN 571 Final Exam (Newest) – Assignment

1. In a general partnership, the general partners have _____ liability and have _____ control over day-to-day operations.
• limited; no
• no; total
• unlimited; no
• limited; total
• unlimited; total

2. Which one of these is a correct definition?
• Long-term debt is defined as a residual claim on a firm’s assets.
• Net working capital equals current assets plus current liabilities.
• Current liabilities are debts that must be repaid in 18 months or less.
• Tangible assets are fixed assets such as patents.
• Current assets are assets with short lives, such as inventory.

3. The owners of a limited liability company generally prefer:
• being taxed personally on all business income.
• having liability exposure similar to that of a general partner.
• having liability exposure similar to that of a sole proprietor.
• being taxed like a corporation.
• being taxed like a corporation with liability like a partnership.

4. Which one of the following is least apt to help convince managers to work in the best interest of the stockholders?pay raises based on length of service
• implementation of a stock option plan
• threat of a proxy fight
• management compensation tied to the market value of the firm’s stock
• threat of a takeover of the firm by unsatisfied stockholders

5.
a. Compute the future value of $2,000 compounded annually for 20 years at 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value $_________
b. Compute the future value of $2,000 compounded annually for 15 years at 10 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value $_________
c. Compute the future value of $2,000 compounded annually for 25 years at 4