1.

Jupiter Ltd is considering an investment in a licence to market a new brand of yoga mats for two years. The cost of the licence is $100,000. You estimate that the licence could generate $55,000 per year of the licence. The cost of capital is estimated to be 15% per annum.

Is the project financially viable according to the Profitability Index?

Answer: True or False

2.

Ajax Ltd, in 2012, reported an amount of $45m in Accounts Receivable, which was up from $39m in the previous year. Inventories were also up on the previous year, being $25m in 2012 as compared with $21m in 2011. This investment in working capital was partly funded by an increase in Accounts Payable, which was $26m in 2012, as compared with $25m in 2011.

Calculate the increase in Net Working Capital in 2012.

(Show an increase in Net Working Capital as a positive amount and show your answer in million dollars, eg $999)

Answer:

Unit

Number

3.

The most accurate measure of the cost of a company's debt is:

Choose one answer.

	A. The yield to maturity of the company's market traded debt.
	B. The company's interest expense.
	C. The coupon rate of the company's market traded debt.
	D. The yield of an Australian government 10-year bond.