BUSI 100 Midterm 1

T/F? In 1970, Andrew Carnegie wrote an influential article in the New York Times arguing "there is one and only one social responsibility of business - to increase its profits without deception or fraud."

FALSE; Milton Friedman said this, not Carnegie

Friedman argues that an executive exercising social responsibility to divert stockholders' money to a social cause the executive values is, in essence, reflective of what famous battle cry from the American Revolution?

Taxation without representation

The key agrument in Friedman's essay is that the manager is the _____ of the individuals who own the corporation and her primary responsibility is to them.

Agent

Milton Friedman believed the managers of a large, publicly-owned corporation should invest the corporation's resources in which of the following ways?

Only for the benefit of the corporation's stockholders

During an in-class exercise several weeks ago, we determined that the insider ownership percentage for most large firms in the U.S. is in what range?

0% < x < 10%

Which of the following words could be defined as "the amount of sales in a period for which a company has fulfilled all of its performance obligations?"

Revenues (Poll Everywhere answer was none of the above)

When preparing the statement of cash flows, we divide cash flows into three categories. Which of the following is not one of the categories?

Investing

Financing

Revenue

Operating

Revenue

Define "assets" in accounting

The company's available resources to create future economic benefits

Ayn Rand notes "Money is a living power that dies without its root. Money will not serve the mind that cannot match it." Which other author have we read in class that also speaks about this idea of who is best fit to spend money?

Andrew Carnegie

T/F? According to Ayn Rand, when men live by trade with force as the final judge, the best product/performance will win.

False

In a free society, which of the following statements is Ayn Rand most likely to agree with?

Money is a tool of exchange, which permits men to trade with one another

According to John Burr Williams, what do all prices utlimately depend on?

Someone's estimate of future income

T/F? John Burr Williams would agree that company earnings, not dividends, are the primary consideration in determining investment value.

False

T/F? John Burr Williams defines investment value of company stock as the present worth of that company's future dividends.

True

Which author that we have read is most likely to have also said: "The problem of the 20th century is the problem of the color line - the relation of the darker to the lighter races of men."

W.E.B. Du Bois (the first African-American to earn a PhD from Harvard)

In The Souls of Black Folk, W.E.B. Du Bois writes, "The keynote of the Black Belt is debt." What does he describe this debt to be?

The continued inability for the population to have their income cover their expenses

According to Du Bois, which of the following statements about debt in the Black Belt is false?

Debt was mostly in the form of commercial credit

According to TripAdvisor, what is the #1 rated restaurant in Chapel Hill?

Sunrise Biscuit Kitchen

Class participation accounts for 10% of student grades and has several different inputs. Which of the following is NOT considered when determining each student's class participation score?

Student Attendance

Why did Adam Smith believe that tariffs and import restrictions might be harmful to the domestic economy?

They cause capital to be inefficiently employed

T/F? Plato's belief that "one man is naturally fitted for one task, and another for another" aptly describes the economic concept of specialization of labor.

True

T/F? John Stuart Mill asserts that the rate of profit greatly exceeds the rate of interest because it also compensates for the risk and the exertion of the capitalist.

True

Bacon discusses the role of usury in the economy. Which of the following is a reason he gives for why usury should not be completely abolished?

Borrowing without interest would lead to numerous economic inconveniences.

Usury: The illegal practice of lending money at unreasonably high rates of interest.

On October 1, 2013, Katah Chuki invests $112,500 of their own money in a new venture. To further help finance the venture, Katah Chuki raises $37,500 of additional equity capital from external investors. Seven years after starting the venture, the venture's assets are valued at $160,000 How much is Katah Chuki's equity stake worth on this date?

120,000

On May 1, 2014, Kaam Ya'tak invests $75,000 of their own money in a new venture. To further help finance the venture, Kaam Ya'tak borrows $75,000 from a bank. The loan term is ten years, at which point the venture must repay the loan in full. Two years after starting the venture, the venture's assets are valued at $260,000. What is Kaam Ya'tak's equity stake worth on this date?

185,000

What does Pacoli indicate as being the most important factor in carrying on business?

Cash

On May 1, 2014, Namika Ozz invests $100,000 of their own money in a new venture. To further help finance the venture, Namika Ozz raises $150,000 of additional equity-capital from external investors. Three years after starting the venture, the venture's assets are valued at $210,000. How much is Namika Ozz's equity stake worth on this date?

84,000

Andrew Carnegie believes that people with extraordinary wealth have a duty to:

Administer his/her wealth while alive to "produce the most beneficial results for the community"

On June 1, 2014, Dagah Keek invests $30,000 of their own money in a new venture. To further help finance the venture, Dagah Keek borrows $70,000 from a bank. The loan term is ten years, at which point the venture must repay the loan in full. Seven years after starting the venture, the venture's assets are valued at $130,000. What is Dagah Keek's equity stake worth on this date?

60,000

Daniel Defoe tells a story about a tradesman who could neither read nor write. What lesson does Defoe intend to communicate by telling this story?

The lesson is that accounting must be done with exactness

On February 1, 2014, Jitan Sa'mi invests $52,500 of their own money in a new venture. To further help finance the venture, Jitan Sa'mi borrows $97,500 from a bank. The loan term is ten years, at which point the venture must repay the loan in full. Six years after starting the venture, the venture is valued at $80,000. What is Jitan Sa'mi's equity stake worth on this date?

0

T/F? In Smith's Wealth of Nations, he makes the argument that given equal profits between domestic and foreign trade, a merchant is likely to put his greatest support into developing the foreign market.

False

In the first verse of "Hark to the Sound", our school's fight song, our school is referred to as...

NCU

T/F? An example of Adam Smith's "invisible hand" is a statesman, council, or senate who directs private citizens in what manner they ought to employ their capital

False

In Plato's "the Republic", individuals exchange with one another, and one gives, and another receives, with the intention that the exchange will...

benefit of the State

be nullified

enrich one, but not the other

be a "zero-sum" transaction

none of the above

none of the above

In Plato's "the Republic", who or what is the "true creator" of a State?

Necessity

What exercise does Thoreau indicate will task the reader more than any other exercise which the customs of the day esteem?

Reading

What was Thoreau referencing when he said that it leads to a "dulness of sight, a stagnation of the vital circulations, and a general deliquium and sloughing off of all the intellectual faculties."

Reading

Who said this phrase: 'The works of the great poets have never yet been read by mankind, for only great poets can read them"

Thoreau

Mark Twain has the famous quote of: "a classic" is a book that people praise and don't read". Would Henry David Thoreau agree with this statement?

Yes

Clark Co. is considering a new project. The initial cash outflows are $18,000. The Company believes the project will yield cash inflows of $3,186 in year 1, $4,248 in year 2, $8,496 in year 3, and $5,310 in year 4. Assuming an annual discount rate of 7%, calculate the project's net present value.

-325.82

Originally attributed to Aristotle, the phrase "The whole is greater than the sum of its parts" most closely relates to which passage from Sun Tzu's "The Art of War"?

The clever combatant looks to the effect of combined energy, and does not require too much from individuals

Jack Welch, former CEO of General Electric, is one of the most frequently referenced businesspeople in the past several decades. One of his many famous quotes is that "an organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage." Which passage from Sun Tzu's "The Art of War" most directly relates to this idea being expressed by Jack Welch?

Do not repeat tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances.

Williams Group started a new business on September 1, 2021. That same day, Williams Group also received $430,000 of cash from issuing common stock and borrowed $230,000 from a friend. On September 1, 2021 Williams Group also purchased equipment for $230,400. The equipment has a useful life of 72 months. On September 1, 2021, Williams also paid $150,000 of cash to rent office space for a 60 month period. During 2021, the Company provided services valued at $158,400 and had collected $126,720 of that amount at year-end. The company will collect the remaining portion in the following year. The company's payroll for 2021 was $83,800, which was paid in full during 2021.

Use this information to find the company's total assets in 2021?

711,800

Williams Group started a new business on September 1, 2021. That same day, Williams Group also received $430,000 of cash from issuing common stock and borrowed $230,000 from a friend. On September 1, 2021 Williams Group also purchased equipment for $230,400. The equipment has a useful life of 72 months. On September 1, 2021, Williams also paid $150,000 of cash to rent office space for a 60 month period. During 2021, the Company provided services valued at $158,400 and had collected $126,720 of that amount at year-end. The company will collect the remaining portion in the following year. The company's payroll for 2021 was $83,800, which was paid in full during 2021.

Use this information to find the company's total liabilities in 2021?

230,000

Williams Group started a new business on September 1, 2021. That same day, Williams Group also received $430,000 of cash from issuing common stock and borrowed $230,000 from a friend. On September 1, 2021 Williams Group also purchased equipment for $230,400. The equipment has a useful life of 72 months. On September 1, 2021, Williams also paid $150,000 of cash to rent office space for a 60 month period. During 2021, the Company provided services valued at $158,400 and had collected $126,720 of that amount at year-end. The company will collect the remaining portion in the following year. The company's payroll for 2021 was $83,800, which was paid in full during 2021.

Use this information to find the company's cash flow from operations in 2021?

-107,080

Williams Group started a new business on September 1, 2021. That same day, Williams Group also received $430,000 of cash from issuing common stock and borrowed $230,000 from a friend. On September 1, 2021 Williams Group also purchased equipment for $230,400. The equipment has a useful life of 72 months. On September 1, 2021, Williams also paid $150,000 of cash to rent office space for a 60 month period. During 2021, the Company provided services valued at $158,400 and had collected $126,720 of that amount at year-end. The company will collect the remaining portion in the following year. The company's payroll for 2021 was $83,800, which was paid in full during 2021.

Use this information to find the company's revenues in 2021?

158,400

Williams Group started a new business on September 1, 2021. That same day, Williams Group also received $430,000 of cash from issuing common stock and borrowed $230,000 from a friend. On September 1, 2021 Williams Group also purchased equipment for $230,400. The equipment has a useful life of 72 months. On September 1, 2021, Williams also paid $150,000 of cash to rent office space for a 60 month period. During 2021, the Company provided services valued at $158,400 and had collected $126,720 of that amount at year-end. The company will collect the remaining portion in the following year. The company's payroll for 2021 was $83,800, which was paid in full during 2021.

Use this information to find the company's net income in 2021?

51,800

Wilhelm Partners started a new business on August 1, 2021. That same day, Wilhelm Partners also received $320,000 of cash from issuing common stock and borrowed $430,000 from a friend. On August 1, 2021 Wilhelm Partners also purchased equipment for $410,400. The equipment has a useful life of 108 months. On August 1, 2021, Wilhelm also paid $93,600 of cash to rent office space for a 24 month period. During 2021, the Company provided services valued at $37,500 and had collected $15,000 of that amount at year-end. The company will collect the remaining portion in the following year.The company's payroll for 2021 was $24,300, which was paid in full during 2021.

Use this information to find the company's balance of total assets as of 12/31/2021?

724,700

O'han Co. started a new business on September 1st, 2021. That same day, O'han Co. also recieved $140,000 of cash from issuing common stock and borrowed $130,000 from a friend. On September 1st, 2021 O'han Co. also purchased equipment for $115,200. The equipment has a useful life of 36 months. On September 1st, 2021, O'han also paid $38,400 of cash to rent office space for a 24 month period. During 2021, the Company provided services valued at $64,800 and had collected $25,920 of that amount at year-end. The company will collect the remaining portion in the following year. The company's payroll for 2021 was $31,900, which was paid in full during 2021.

Use this information to find the company's net income in 2021?

13,700

On August 1, 2014, Keo Ruug invests $60,000 of their own money in a new venture. To further help finance the venture, Keo Ruug borrows $140,000 from a bank. The loan term is ten years, at which point the venture must repay the loan in full. Three years after starting the venture, the venture is valued at $140.000.

What is Keo Ruug's equity stake worth on this date?

0

Wu Corporation started a new business on November 1, 2021. That same day, Wu Corporation also received $50,000 of cash from issuing common stock and borrowed $90,000 from a friend. On November 1, 2021 Wu Corporation also purchased equipment for $72,000. The equipment has a useful life of 36 months. On November 1, 2021, Wu also paid $18,000 of cash to rent office space for a 12 month period. During 2021, the Company provided services valued at $16,800 and had collected $3,360 of that amount at year-end. The company will collect the remaining portion in the following year.The company's payroll for 2021 was $8,000, which was paid in full during 2021.

Use this information to find the company's net income in 2021?

1,800

Cauley Co. started a new business on July 1, 2021. That same day, Cauley Co. also received $350,000 of cash from issuing common stock and borrowed $300,000 from a friend. On July 1, 2021 Cauley Co. also purchased equipment for $302,400. The equipment has a useful life of 108 months. On July 1, 2021, Cauley also paid $91,200 of cash to rent office space for a 24 month period. During 2021, the Company provided services valued at $78,000 and had collected $31,200 of that amount at year-end. The company will collect the remaining portion in the following year.The company's payroll for 2021 was $43,900, which was paid in full during 2021.

Use this information to find the company's balance of total assets as of 12/31/2021?

644,500

House Co. is considering a new project. The initial cash outflows are $1,000. The Company believes the project will yield cash inflows of $108 in year 1, $108 in year 2, $432 in year 3, and $432 in year 4.

Assuming an annual discount rate of 8%, calculate the project's net present value.

-146.94

When discussing ____________________ in class, we watched Shark Tank, a TV show where entrepreneurs come and pitch their ideas to investors such as Mark Cuban, Barbara Corcoran, Kevin O'Leary, Daymond John, Robert Herjavec, Lori Greiner, and others. In the episode we watched, the idea being pitched was Honeyfund, a gift registry designed to pay for a wedding couple's honeymoon costs.

Capital structure (i.e., debt vs equity financing)

When discussing present value of money concepts, we watched a video during lecture based on the famous Stanford ____________________ Experiment where kids were rewarded if they waited a certain period of time before eating the item that was placed in front of them.

Marshmallow

Kelley LP is considering a new project. The initial cash outflows are $6,000. The Company believes the project will yield cash inflows of $732 in year 1, $732 in year 2, $1,464 in year 3, and $4,392 in year 4. Assuming an annual discount rate of 7%, calculate the present value of future cash flows for the project.

5,869.17

The upcoming midterm exam will count for what percentage of your final grade?

Hint: Look at the syllabus!

There is not enough information here to answer the question

Which singer/band has Professor Hendricks most frequently listened to on Spotify this summer?

Kacey Musgraves

Which job has Professor Hendricks never held?

Mrs. Fields Cookies - Cookie Maker

Professor Hendricks' dream job is...?

2nd Baseman for the Detroit Tigers

If Professor Hendricks had infinite wealth and could live anywhere, where would he live?

San Diego, CA

TA Kaley Wong: Find the lie

COVID has her without taste and smell

Had her green card taken away

Has never read Harry Potter

COVID has her without taste and smell

TA Andres Cremer: Find the lie

Broke his wrist playing tennis

Lived in 3 different countries

Played soccer in high school

Broke his wrist playing tennis

TA Clarisse Marzynski: Find the lie

Completed most dangerous hike in USA

Has a pet bird

Swam with dolphins

Has a pet bird