Calculate Effa Design net cash flow for the month

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Reference no: EM132833601

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Q1) Lang Enterprises needs RM1,000,000 for the purpose of opening a new branch in Selangor. The firm can raise the fund by selling RM1,000 par value, 8 percent coupon interest rate, 20-year bonds on which annual interest payments will be made. The bond will be sell at an average discount of RM30 per bond. The firm is in the 40 percent tax bracket and the flotation costs are at RM30 per bond. Determine the firm's cost of issuing bond?

A. 15.60%

B. 5.13%

C. 26.00%

D. 8.56%

Q2) Companies hold inventories to ascertain that the purchasing, production and marketing can function independently. However, holding a large inventory can cause problems to firms. Which of the following does not represent the problem that may be incurred by the management of a company if they have a large stock of inventories.

A. Obseleteness

B. forgone opportunity cost

C. high carrying cost

D. reduced insurance cost

Q3) Effa Design Incorporation is preparing a cash budget for the month of December 2020. The following are its sales figures:

Actual Sales (RM) Forecasted Cells (RM)

October 130, 000 December 110, 000

November 100, 000 January 130, 000

The company collects 60 percent of its sales in the month sales, and the balance will be collected in the following month. Purchases of raw materials is 70 percent of sales and made one month before the expected sale. The company makes payment of the purchases in the month of sales. A new equipment cost RM20,000 will be installed in January 2021. Monthly fixed expenses is RM15,000 in December 2020. From the information given, calculate Effa Design's net cash flow for the month of December 2020.

A. RM20,000

B. RM(2,000)

C. RM(20,000)

D. RM16,000

Reference no: EM132833601

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