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Comp XM 3 Exam Graded A+
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Comp XM 3 Exam Graded A+
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Comp XM 3 Exam Graded A+Baldwin Corp. ended the year carrying $22,791,000 worth of inventory. Had they sold
their entire inventory at their current prices, how much more revenue would it have
brought to Baldwin Corp.? - ANSWER-a) $35,937,000 b) $22,791,000 c) $47,796,210
d) $12,379,000
Company Baldwin invested $30,800,000 in plant and equipment last year. The plant
investment was funded with bonds at a face value of $19,109,969 at 12.1% interest,
and equity of $11,690,031. Depreciation is 15 years straight line. For this transaction
alone which of the following statements are true? - ANSWER-a) Depreciation increased
by $2,053,333.
b) Cash went up when the Bond was issued by $19,109,969.
c) Buying the plant had no net effect on the Cash account, because the plant was paid
for by the bond plus retained earnings.
d) Cash was pulled from retained earnings to cover the $11,690,031 difference between
the plant purchase and bond issue.
e) On the Balance sheet, Plant & Equipment increased by $30,800,000.
f) Since the new plant was funded with debt and equity, on the Balance sheet Retained
Earnings decreased by $11,690,031, the difference between the investment
$30,800,000 and the bond $19,109.969.
g) Cash went down by $30,800,000 when the plant was purchased.
h) On the Balance sheet, Long Term Debt changed by $19,109,969.
It is January 2nd and senior management of Digby meets to determine their investment
plan for the year. They decide to fully fund a plant and equipment purchase by issuing
75,000 shares of stock plus a new bond issue. Assume the stock can be issued at
yesterday's stock price ($36.97) and leverage changes to 2.7. Which of the following
statements are true? - ANSWER-a) Working capital will remain the same at
$15,570,093
b) Digby will issue stock totaling $2,772,750
c) Equity will be $84,060,609
d) Total liabilities will be $121,856,406
e) Total Assets will rise to $219,477,219
f) The total investment for Digby will be $208,689,765
Mike is the Director of Human Resources for a 120-employee family-owned
manufacturing firm. Mike has been quite busy the last year reforming the benefit
offerings to comply with recent changes in healthcare laws. Given the many changes,
Mike took the opportunity to completely overhaul the employee benefits program
including replacing the old medical plans with three brand-new plans. Mike is preparing
to tell employees about their new benefit offerings a few months prior to the benefits
open-enrollment period. Given the number of employees, he decides to design a nicely
formatted PowerPoint slide deck explaining the changes and to send this presentation
via email to all employees. One day into the open-enrollment period, his inbox is flooded
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