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Help me to do a managerial finance online exam right now.

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You will have 100mins to answer questions

40 multiple choice and 10 true or false

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You need to promise the accurate rate is above 60 percent

FINAL LECTURE
1
FIN 921
Managerial Finance
2020 TRI 1 – FIN 921 - Dr MARIA KIM
Week 10
THANK YOU!
THANK YOU FOR YOUR HARD WORK,
AND I WISH YOU ALL THE BEST!!!
2
2020 TRI 1 – FIN 921 - Dr MARIA KIM
DESPITE THE DIFFICULT SITUATION,
YOU’VE DONE A GREAT JOB SO FAR,
EVERYONE!
WHAT WE LEARNT FROM LAST LECTURE
Capital
structure:
What is capital structure?
The effect of Financial Leverage
Three
2020 TRI 1 – FIN 921 - Dr MARIA KIM
cases
Capital structure irrelevance under perfect capital
market
M&M Proposition I
M&M Proposition II
2. The impact of taxes on capital structure choice
3. Tradeoff between tax savings and bankruptcy costs
1.
Optimal
capital structure
3
THIS LECTURE COVERS
About final exam (Don’t miss it!)
Revision
Time to say GOODBYE~
2020 TRI 1 – FIN 921 - Dr MARIA KIM
4
PART 1 – FINAL EXAM
2020 TRI 1 – FIN 921 - Dr MARIA KIM
Essentials of corporate finance
Ross et al. 4th edition
5
FINAL EXAM
TIMETABLE &
FORMAT
2020 TRI 1 – FIN 921 - Dr MARIA KIM
Trimester 1, 2020
Time: Wed, 29/APR/2020, 10:30 – 12:30 Sydney time
(8:30 – 10:30 in China)
Online Moodle Exam (same as midterm exam)
Study Lecture slides, textbook and tutorial questions.
Mock-up practice questions available on the Moodle (from
20th April)
6
Prepare for the UOW approved calculator.
Make sure your calculator is working well.
FINAL EXAM DESIGN
40 Multiple choice questions and 10 True or False
questions to be answered on the Moodle (each 2 marks)
Exam duration: 2 hours
You need a firm understanding of concepts and
theory to carry out the relevant calculation.
It covers all chapters from week 1 to week 10.
About 20 questions up to midterm exam topics, and 30
questions for the remaining topics.
Please download and prepare for the Final Exam Formula
sheet during your exam.
This exam is worth 50% of the subject mark. You must
obtain at least 50% in this exam, otherwise you will get TF.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
7
PART 2 – REVIEW
2020 TRI 1 – FIN 921 - Dr MARIA KIM
8
QUIZ
●
A.
B.
C.
D.
E.
$58 913
$61 246
$61 487
$63 909
$64 128
2020 TRI 1 – FIN 921 - Dr MARIA KIM
The Plaza Cafe has an operating cash flow of $78 460, a
depreciation expense of $8 960, and taxes paid of $21 590. A
partial listing of its balance sheet accounts has a beginning
balance with current assets of $141 680, net fixed assets of
$687 810, current liabilities of $87 340 and long‐term debt of
$267 000. Also, the balance sheet account has an ending
balance with current assets of $138 509, net fixed assets of
$703 411, current liabilities of $91 516, and long‐term debt of
$248 000. What is the cash flow from assets?
9
QUIZ
●
B.
C.
D.
E.
$201 516.38; $201 516.38
$209 092.54; $201 516.38
$209 092.54; $119 959.94
$209 092.54; $209 092.52
$221 408.97; $119 949.94
2020 TRI 1 – FIN 921 - Dr MARIA KIM
A.
You have $5000 you want to invest for the next 45 years.
You are offered an investment plan that will pay you 6%
per year for the next 15 years and 10% per year for the
last 30 years. How much will you have at the end of the 45
years? How much will you have if the investment plan
pays you 10% per year for the first 15 years and 6% per
year for the next 30 years?
10
QUIZ
Which of the following is True?
A.
The price of a coupon bond is equal to the present value of all
future coupons.
The interest rate on a bond is positively related to the price of
the bond.
Interest rate risk increases with the size of the coupon.
The real rate of interest affects both the level and shape of the
yield curve.
Interest rate risk increases with the term to maturity.
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
●
11
QUIZ
●
11.81%
B. ‐10.57%
C. ‐43.04%
D. 10.57%
E. ‐11.81%
A.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
A company issues a 10‐year bond at par with a coupon
rate of 6% paid semi‐annually. The YTM at the beginning
of the third year of the bond (8 years left to maturity) is
7.8%. What was the percentage change in the price of the
bond over the past two years?
12
QUIZ
●
$17.71
B. $18.97
C. $20.50
D. $21.08
E. $21.69
A.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
A firm expects to increase its annual dividend by 20% per
year for the next two years and by 15% per year for the
following two years. After that, the company plans to pay
a constant annual dividend of $3.00 per share. The last
dividend paid was $1.00 per share. What is the current
value of this stock if the required rate of return is 12%?
13
QUIZ
Which one of the following statements is correct?
A.
If the IRR exceeds the required return, the profitability index will
be less than 1.0.
The profitability index will be greater than 1.0 when the net
present value is negative.
When the internal rate of return is greater than the required
return, the net present value is positive.
Projects with conventional cash flows have multiple internal
rates of return.
If two projects are mutually exclusive, you should select the
14
project with the shortest payback period.
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
●
QUIZ
Start‐up costs to introduce a new project includes $200 000 to
buy new production equipment and $100 000 to fully install and
integrate this equipment. The equipment has an economic life of
four years and the company will depreciate it for taxation
purposes at 10% prime cost per annum. The equipment is
expected to have a salvage value of $55 000 after four years of
use. The corporate tax rate is 35%. Calculate the tax effect on
salvage cash flows at the final (fourth) year of the project.
A.
No tax effect on cash flows.
Decrease of cash flow of $19 250.
Increase of cash flow of $43 750.
Decrease of cash flow of $43 750.
Increase of cash flow of $19 250.
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
●
15
QUIZ
The Bondi Pizza Palace is looking at a new pizza oven with an
installed cost of $438 000. This cost will be depreciated
straight‐line to zero over the project's four‐year life, at the
end of which the system can be scrapped for $69 000. The
pizza system will save the firm $129 000 per year in pre‐tax
operating costs and the system requires an initial investment
in net working capital of $29 000, which will be recouped at
project end. If the tax rate is 35% and the discount rate is
9%, what is the NPV of this project.
A.
‐$6320
$20 560
$14 410
$26 880
‐$18 870
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
●
16
QUIZ
Which of the following statements regarding
standard deviation is False?
A.
Standard deviation is a measure of the uncertainty surrounding
the future cash flows.
Standard deviation is a measure of non‐systematic risk.
Standard deviation is a measure of total risk.
Standard deviation is the same thing as the squared root of
variance.
Standard deviation is a measure of volatility of asset returns.
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
●
17
QUIZ
The beta of a risk‐free security is ______ and the
risk associated with the overall market is
referred to as _________ risk.
A.
0: diversifiable
1; unsystematic.
0; unsystematic.
1; non‐diversifiable.
0; systematic.
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
●
18
QUIZ
Investors who do not have a diversified portfolio of
investments face
A.
Systematic risk
Unsystematic risk
Systematic risk and unsystematic risk
Less risk
No risk
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
●
19
QUIZ
Over the past ten years, large‐company stocks have
returned 11.2%. The risk premium on these stocks was
4.8% and the inflation rate was 3.7%. What was the
risk‐free rate of return?
A.
2.7%
6.4%
7.5%
8.5%
10.1%
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
●
20
QUIZ
●
Stock
Expected return
Beta
A
7.7%
0.7
B
13.1%
1.6
C
9%
1.1
D
10.4%
0.4
2020 TRI 1 – FIN 921 - Dr MARIA KIM
The risk‐free rate of return is currently 3.5% and the
market risk premium is estimated to be 6%. The expected
returns and betas of four stocks are as follows.
Which of the following is True?
A.
B.
C.
D.
A and B are fairly priced, C is underpriced and D is overpriced.
B and D are fairly priced, A is underpriced and C is overpriced.
A and B are fairly priced, C is overpriced and D is underpriced.
All stock are fairly priced.
21
QUIZ
Which of the following represents the best estimate
for a firm’s pre‐tax cost of debt?
A.
Twice the rate of return currently offered on risk‐free securities
The firm’s historical cost of capital
The current coupon on the firm’s existing debt
The weighted average cost of capital
The current yield‐to‐maturity on the firm’s existing debt
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
22
QUIZ
All things being equal, which of the following will increase the
after‐tax cost of debt for a firm?
I. Increase in the yield to maturity of the firm's outstanding
debt
II. Decrease in the yield to maturity of the firm's outstanding
debt
III. Increase in the firm's tax rate
IV. Decrease in the firm's tax rate
A.
I only
I and III only
II and III only
II and Iv only
I and IV only
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
23
QUIZ
Sheldon is trying to decide what cost of capital he
should assign to a project. Which one of the
following should be his primary consideration in this
decision?
A.
amount of debt used to finance the project
use of preferred stock to finance the project
mix of funds used to finance the project
risk level of the project
Length of the project’s life
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
24
QUIZ
Piedmont Hotels is an all‐equity firm with 60 000 shares of
share outstanding. The share has a beta of 1.27 and a
standard deviation of 13.8%. The market risk premium is
9.1% and the risk‐free rate of return is 4.5%. The company
is considering a project that it considers riskier than its
current operations so it wants to apply an adjustment of 1%
to the project's discount rate. What should the firm set as
the required rate of return for the project?
A.
12.54%
13.92%
15.39%
17.06%
17.33%
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
25
QUIZ
Which one of the following is an implication of
M&M Proposition II, without taxes?
A.
A firm's optimal capital structure is 100 per cent debt.
WACC is unaffected by the capital structure of a firm.
WACC decreases as the debt–equity ratio increases.
A firm's capital structure is irrelevant.
The risk of equity depends on both the degree of financial
leverage and the riskiness of the firm's operations.
B.
C.
D.
E.
2020 TRI 1 – FIN 921 - Dr MARIA KIM
26
QUIZ
A.
B.
C.
D.
E.
$2.25 million
$4.50 million
$7.50 million
$9.00 million
$0.675 million
2020 TRI 1 – FIN 921 - Dr MARIA KIM
If a firm permanently borrows $25 million at an interest
rate of 9%, what is the present value of the interest tax
shield? Assume a 30% corporate tax rate.
27
2020 TRI 1 – FIN 921 - Dr MARIA KIM
28
...

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