Currently,you Own 5

question 24

Multiple Choice

Currently,you own 5.4 percent of the outstanding stock of Keiffer Industries.The firm has decided to issue additional shares of stock and has given you the first option to purchase 5.4 percent of those additional shares.Which one of the following will you be participating in if you opt to purchase the shares you have been offered?

• A)Rights offer
• B)Red herring offer
• C)Private placement
• D)IPO
• E)General cash offer

Interpret the results of financial calculations to make investment decisions.

Understand the concept of an annuity and its relevance in investment decisions.

Apply the concept of present value index in evaluating investment proposals.

Analyze capital investment proposals using present value concepts.

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Definitions:

Net Pay

The amount of money that an employee takes home after all deductions, such as taxes and retirement contributions, have been subtracted from their gross pay.

FICA-OASDI

A U.S. payroll tax that funds the Social Security and Medicare programs, officially known as the Federal Insurance Contributions Act - Old Age, Survivors, and Disability Insurance.

FICA-Medicare

A federal tax deducted from employees' paychecks and matched by employers to fund the Medicare program.

SUTA Payable

A liability account showing the amounts due to the state for state unemployment taxes, payable by employers based on established rates.