DeVry BUSN 379 Final Exam 100% Correct Answer

8/18/2019 DeVry BUSN 379 Final Exam 100% Correct Answer

1/17

DeVry BUSN 379 Final Exam

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0' 12C 45 6hich of the followin is tre rear%in the e&alation of "ro8ects 1:oints !45

snk costs shol% be incl%e%

erosion effects shol% be consi%ere%

financin costs nee% to be incl%e%

o""ortnity costs are irrele&ant

;estion


2/17

ha&e "ositi&e >s'

ha&e "ositi&e N:Vs'

;estion 4' 4' 12C 3 an% 45 6hat is the net "resent &ale of a "ro8ect with thefollowin cash flows if the %iscont rate is 0 "ercent

=ear E 0 < 3 4Cash

flow

,F3


3/17

fa&orable!1:oints ! 45

is a &alable o"tion'

is referre% to as the o"tion to exten%'

col% not case a neati&e net "resent &ale "ro8ect to become a "ositi&e net "resent &ale "ro8ect'

will enerally case the internal rate of retrn for a "ro8ect to %ecline'

;estion 7' 7' 12C 45 KKKKKKKKKKK occrs when a firm cannot raise financin for a"ro8ect n%er any circmstances' 1:oints ! 45

continency "lannin'

har% rationin'

soft rationin'

ca"ital constraint'

scenario analysis'

;estion H' H' 12C 45 ABC Cameras is consi%erin an in&estment that will ha&e a cost of F0EEEE an% the followin cash flows! FIEEE in year 0 F4EEE in year < an% F3EEE inyear 3' Assme the cost of ca"ital is 0EV' 6hich of the followin is tre rear%in thisin&estment 1:oints ! 45

2he net "resent &ale of the "ro8ect is a""roximately F0E00

2his "ro8ect shol% be acce"te% becase it has a neati&e net "resent &ale

2his "ro8ectWs "ayback "erio% is 0E years or more

All of the abo&e are tre

;estion 9' 9' 12C 45 Assme Com"any X "lans to in&est I in in%striale?i"ment' Usin 2ables 9'I an% 9'7 of yor textbook 1:ae


4/17

HG74

09H

None of the abo&e

;estion 0E' 0' 12C 0 an% 45 Assme a cor"oration has earnins before %e"reciationan% taxes of 0 %e"reciation of 4 an% that it has a 3 "ercent tax

bracket' 6hat are the after,tax cash flows for the com"any 1:oints ! 45

H


5/17

;estion 03' 03' 12C H5 2he stock of Chocolate Zalore is ex"ecte% to "ro%ce thefollowin retrns i&en the &arios states of the economy' 6hat is the ex"ecte%

retrn on this stock

State of

Economy

:robability of State of

Economy

ate of

etrn

ecession 'E< ,'EI Normal 'HH '00Boom '0E '07

1:oints ! 45

7'33 "ercent

9'H< "ercent

00'


6/17

'GG

'I0

'7

'9

0' 12C H5 >f the financial markets are stron form efficient then! 1:oints ! 45

only the most talente% analysts can %etermine the tre &ale of a secrity'

only com"any insi%ers ha&e a market"lace a%&antae'

technical analysis "ro&i%es the best tool to ain a market"lace a%&antae'

no one "erson has an a%&antae in the market"lace'

e&ery secrity offers the same rate of retrn'

;estion f

the re?ire% rate of retrn is 03 "ercent what is its crrent "rice 1:oints ! 45

03'IH


7/17

3I'9<

9I'

none of these

;estion 4' 4' 12C G I an% 75 6hich of the followin is not tre rear%in the cost of %ebt 1:oints ! 45

>t is the retrn that the firmWs cre%itors %eman% on new borrowin'

>t is the interest rate that the firm "ays on crrent#existin borrowin'

An a""ro"riate metho% to com"te the cost of %ebt is sin the =2Y of crrent bon%s

otstan%in'

>t nee%s to be con&erte% into an after,tax cost'

;estion G' G' 12C G5 6hich of the followin is not tre rear%in the cost of retaine%earnins 1:oints ! 45

it is rele&ant to the 6ACC

%oes not re?ire new fn%s to be raise%

has associate% flotation costs

has a cost which is the o""ortnity cost associate% with stockhol%er fn%s

;estion I' I' 12C 45 A "ro8ect has the followin cash flows' 6hat is the internal rateof retrn

=ear E 0 < 3Cash

flow

,

F09GIEE

F99HE

E

FH7IE

E

F7G3E

E1:oints ! 45

less than G

between G an% 0G


8/17

between 0G an% 0H

more than


9/17

"re,bankr"tcy sharehol%ers ten% to lose "art if not all of their in&estment in the

firm

a trstee,in,bankr"tcy is electe% by the cre%itors

;estion 0E' 0' 12C G5 6hich of the followin statements is false rear%in the cost of ca"ital 1:oints ! 45

2he cost of ca"ital shol% consi%er the flotation costs'

All other bein e?al it is "referable to se market &ale weihts than book &ale

weihts'

2he 6ACC is the most a""ro"riate %iscont rate for all "ro8ects'

Shol% incl%e the cost of retaine% earnins'

;estion 00' 00' 12C


10/17

2he o"timal cre%it "olicy is the "olicy that "ro%ces the larest amont of sales for a

firm'

;estion 03' 03' 12C


11/17

Becase this criterion is non,ambios'

Becase financial manaers always act in the best interest of sharehol%ers'

Becase it creates short,term ains in the financial statements'

I' 12C 05 :ro&i%e three exam"les of recent well,known nethical beha&ior cases' Ex"lain

the sitation in one or two "arara"hs' Jow %o yo belie&e that this beha&ior affecte% the

firmWs &ale 1:oints ! 0E5

7' 12C 45 6hat are snk costs :ro&i%e at least two real,life exam"les of snk costs for a

"ro8ect' Shol% snk costs be incl%e% as incremental cash flows 6hy or why not Ex"lain

yor rationale' 1:oints ! 0E5

H' 12C H5 6hat is the %ifference between bsiness risk an% financial risk >f Com"any A has

a hiher bsiness risk than Com"any B shol% its cost of ca"ital be hiher 6hy or why

not Ex"lain yor rationale' 1:oints ! 0E5

9' 12C ' how to obtain short,term financin

>>' the com"any[s financin mix

>>>' the cost of fn%s


12/17

>V' how an% where to raise money 1:oints ! 45

> an% >>

> >> an% >>>

>> >>> an% >V

> >>> an% >V

All of the abo&e

;estion ncome 2ax

ate

FE, FGEEEE 0GVFGEEE0, 7GEEE


13/17

34

3I

37

3H

;estion 4' 4' 12C 35 eional Bank offers yo an A: of 09 "ercent com"on%e%semiannally an% ôcal Bank offers yo an EA of 09'G "ercent for a new atomobile

loan' =o shol% choose KKKKKKKKKKKKKK becase its KKKKKKK is lower' 1:oints ! 45

eional Bank A:

ôcal Bank EA

eional Bank EA

ôcal Bank A:

;estion G' G' 12C 35 =o %e"osite% F00EEE in yor bank accont to%ay' 6hich of the followin will%ecrease the ftre &ale of yor %e"osit assmin that all interest is rein&este% Assme the interest rate is a

"ositi&e &ale' Select all that a""ly! 1:oints ! 45

a %ecrease in the interest rate

increasin the initial amont of yor %e"osit

increasin the fre?ency of the interest "ayments

%ecreasin the lenth of the in&estment "erio%

;estion I' I' 12C 35 Amy nee%s to sa&e


14/17

04G97'I<

0744'3<

070


15/17

0H

0HG

9


16/17

0'I

00'G

0


17/17

"ayin the ex"enses re?ire% to reisse otstan%in bon%s'

"ayin the _balloon "ayment_ at matrity'

DeVry BUSN 379 Final Exam

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DeVry BUSN 379 Final Exam 100% Correct Answer