Business Finance Final Exam (100%correct)

. In comparing the internal rate of return and net present value methods of evaluation, ________. net present value is theoretically superior, but financial managers prefer to use internal rate of return 2. The cost to a firm of each type of capital is dependent upon ________. the risk-free rate of each type of capital plus the business risk and the financial risk of the firm 3. A firm purchased goods on January 27 with a purchase price of $1,000 and credit terms of 2/10 net 30 EOM. The firm paid for these goods on February 9. The firm must pay ________ for the goods. $980 4. When managing accounts payable, a good strategy would be to ________. pay as early as possible creating better credit rating for a firm 5. A firm has fixed operating costs of $650,000, a sales price per unit of $20, and a variable cost per unit of $13. At a base sales level of 500,000 units, the firm's degree of operating leverage is ________. 1.23 6. A firm has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 70 days. Its operating cycle is ________ days. 95 7. Tangshan Mining has common stock at par of $200,000, paid-in capital in excess of par of $400,000, and retained earnings of $280,000. In states where the firm's legal capital is defined as the total of par value and paid-in