Final Test Page 1
1 . (TCO A) Which usually of the subsequent does NOT usually increase a company's market value? (Points: 5) Increasing the expected progress rate of sales Raising the anticipated operating earnings (NOPAT/Sales) Lowering the capital requirements (Capital/Sales)
Lessening the measured average cost of capital
Increasing the predicted rate of return about invested capital| 2 . (TCO F) Which of the following statements is correct? (Points: 5) For a project with regular cash moves, any enhancements made on the WACC will change both NPV and the IRR. To obtain the MIRR, we first compound cash moves at the regular IRR to get the TV, then we low cost the TV at the WACC to obtain the PV. The NPV and IRR strategies both assume that cash flows can be reinvested at the WACC. However , the MIRR method assumes reinvestment at the MIRR itself. In the event two jobs have the same price, and if all their NPV profiles cross in the upper right quadrant, then the task with the larger IRR almost certainly has more of its cash flows coming in the old age. If two projects have the same cost, and if their NPV profiles get across in the rightmost top corner quadrant, then this project with all the lower IRR probably recieve more of the cash runs coming in the later years. | 3. (TCO D) The Ramirez Provider's last gross was $1. 75. Its dividend development rate is usually expected to always be constant for 25% for 2 years, and dividends are required to grow at a rate of 6% permanently. Its needed return (rs) is 12%. What is the best estimate of the current inventory price? a. $41. 58 b. $42. 64
c. $43. 71
d. $44. 80
electronic. $45. 92(Points: 20)
four. (TCO G) The HURUF Corporation's budgeted monthly product sales are $4, 000. Inside the first month, 40% of its consumers pay and take the 3% discount. The 60% spend in the month following the sale and don't receive a discount. ABC's bad debts are very small and happen to be excluded out of this analysis. Purchases for up coming month's sales are frequent each month by $2, 500. Other payments for salary, rent,...