Reference no: EM132554824

Question 1: Goods with $300 are sold on account for terms '2.5/8, net 30'. The cost of forgoing the cash discount in this instance would be:

Select one.

A. 40%

B. 38%

C. 43%

D. 62%

Question 2: Which of the following statements is FALSE?

A. Once a capital project is approved, the role of a financial manager is still essential

B. Capital projects are a long term investment

C. Capital projects are difficult to reverse

D. Ideas for investment projects stem mainly from the firm's finance department.

Question 3: KaiViti is a Fijian biotechnology company that develops vaccinations. It needs to raise $40 million to fund new research. It has 20 million ordinary shares on issue, and these are currently selling on the SPSE for $15.50.

The directors decide to make a 1-for-5 rights issue at $10 subscription. What is the theoretical ex-rights price?

A. $14.58

B. $4.58

C. $10

D. $15.50

Question 4: A project will generate cash inflows of $10 000 next year and $20 000 in the following year. Initial costs are $5000. The cost of capital is 8% The NPV of this project is:

A. $21 406

B. $23 295

C. $20 000

D. $22 400

Question 5: Capco has a capital structure that is composed of $10 million of debt and $30 million of ordinary shares. If CapCo is in the 30% marginal tax rate, what is its WACC if the yield to investors on CapCo debt is 8% and the cost of CapCo ordinary shares is 12%.

A. 10.40%

B. 30%

C. 8.3%

D. 11.0%

Question 6: A firm that moves from traditional inventory stocking methods to a just-in-time (JIT) system should expect to see:

A. Its inventory turnover increase and its average age of inventory decrease

B. Its inventory turnover decrease and its average age of inventory increase

C. Its inventory turnover increase and its average age of inventory increase

D. Its inventory turnover decrease and its average age of inventory decrease

Question 7: Which of the following is not, according to John Maynard Keynes, a motive for holding cash?

A. The precautionary motive

B. The tax avoidance motive

C. The speculative motive

D. The transactions motive

Question 8: A commercial bill with a face value of $50 000 has a current price of $49291. This bill is trading at a yield of 7.5% which necessarily implies a time to maturity of:

Select one:

A. 70 days

B. 90 days

C. 80 days

D. 100 days