Which of the following could explain why a business might choose to operate as a corporation rather than as a sole proprietorship or a partnership?Corporations generally face fewer reporting and filing regulationsCorporations have a limited lifeCorporate investors are exposed to unlimited liabilityCorporations generally find it easier to raise capitalThe primary operating goal of a publicly-owned firm interested in serving its stockholders should be tomaximize its net income.maximize its market share.minimize the chances of losses.maximize the stock price per share to maximize its shareholders’ wealth.minimize its operating costs.Agency costs refer tothe total dividends paid to stockholders over the lifetime of a firm.the costs that result from default and bankruptcy of a firm.corporate income subject to double taxation.the costs that arise due to conflicts of interest between shareholders and managersthe total interest paid to creditors over the lifetime of the firm.Of the ratios listed below the ratio that is the best measure of a firm’s overall liquidity when inventory cannot be easily converted into cash isthe quick ratio.the debt-to-equity ratio.the inventory turnover ratio.the current ratio.Shareholders are said to have a residual claim on the firm’s assets. What does this mean?Shareholders have limited liability in their investment.Shareholders do not receive any payoff from the firm until all creditors are paid.Shareholders are allowed to recover their investment first if the firm experiences financial distress.Shareholders have priority in electing the board of directors for the firm.The Rollings Company had sales of $1 000 with cost of goods sold (COGS) equal to 30% of sales. Rollings also had total other operating expenses of $400 interest expense of $125 and is subject to a flat 40% of its pre-tax income in income taxes. What is Rollings’ net income?$1 000$300$105$700Suppose you have $2 000 and plan to purchase a 10-year certificate of deposit (CD) that pays 7% interest compounded annually. How much will you have when the CD matures?$3 934.30$3 186.79$3 422.84$3 816.27$4 642.48The Lions just signed their quarterback to a 10-year $50 million contract. Is this contract really worth $50 million? (Assume the discount rate is greater than zero)Yes because the payments over time add up to $50 million.No it is worth more because he can invest the money.No it would only be worth $50 million if it were all paid out today.Yes because his agent told him so.You are going to receive $80 at the end of each year for the next 12 years. If you invest each of those amounts at 12% then what amount of money will you have at the end of the 12th year?$960.00$2 597.32$195.00$1 930.65Aqua Park can purchase a new dolphin (their old one died) for $5 000. The new dolphin will encourage greater park attendance and therefore increase the annual cash inflow by $2 000 for Years 1 2 3 and 4. If the cost of capital for the project is 10% then what is the profitability index for the project?1.671.471.271.87
