1) Which of the following types of managers do NOT need an understanding of accounting and finance to do their jobs?

Select one:

a.Marketing managers

b.IT managers

c.Personnel managers

d.None of the above.(In other words, all of these managers need an understanding of accounting and finance to do their jobs.)

2)On which two elements of the accounting information system is this subject focused?

Select one:

a.Information identification and information communication

b.Information analysis and information communication

c.Information identification and information recording

d.Information recording and information analysis

3) Which of the following is considered to be an "internal" user of accounting information?

Select one:

a.Shareholders

b.Employees

c.Managers

d.All of the above

4) Which of the following statements about the differences between financial and management accounting is true?

Select one:

a.Management accounting is constrained by accounting standards.

b.Management accounting can only include financial information.

c.Financial accounting can be based on past, current and future events.

d.Financial accounting needs to be objective and auditable.

5) Who does the financial manager primarily make decisions on behalf of?

Select one:

a.Government

b.Shareholders

c.Employees

d.Senior managers

6) What is the future value of $8000 invested for 9 years at an interest rate of 8% p.a.?

Select one:

a.$15958

b.$15937

c.$15992

d.$16004

7) What is the future value of $5000 invested for 9 years at an interest rate of 8% p.a.?

Select one:

a.$9984

b.$9995

c.$10031

d.$10051

8)What is the future value of $3000 invested for 5 years, if the interest rate is 7% p.a., compounding quarterly?

Select one:

a.$4192

b.$4254

c.$4205

d.$4244

9) What is the future value of 5 annual payments of $250, with the first payment to occur one year from today, if the interest rate is 10% p.a.?

Select one:

a.$1491

b.$1578

c.$1540

d.$1526

10) What is the price of a zero-coupon bond with a face value of $500, 9 years to maturity and a yield of 4.8% p.a.?

Select one:

a.$323.01

b.$329.97

c.$327.88

d.$334.16

11) What is the future value of $3000 invested for 5 years, if the interest rate is 7% p.a., compounding quarterly?

Select one:

a.$4192

b.$4254

c.$4205

d.$4244

12)Project Beta is a 3-year project which requires an initial outlay of $3,000.This outlay will be depreciated usingstraight-line depreciation over the life of theproject.It will generate incremental revenue of $6000 per year and incremental costs (excluding depreciation) of $1200.The tax rate is 20%.

What is the project's annual incremental EBIT?

Select one:

a.$2800

b.$3800

c.$5800

d.$3800

13) Project Beta is a project which will last for 4 years and which requires an initial outlay of $4,000.This outlay will be depreciated usingstraight-line depreciation over the life of theproject.It will generate incremental revenue of $4000 per year.The value of incremental, after-tax earnings is $1332 per year.The project will require Net Working Capital equal to 20% of incremental revenue.

What is the value of incremental free cash flow in Year 0?

Select one:

a.$-4800

b.$4800

c.$-3200

d.$3200

14) Equipment with a book value of $5,000 will be sold at the end of a project for a salvage value of $10,000.The tax rate is 25%.What is the tax effect resulting from the profit or loss from the sale of the equipment (where a negative number means tax is payable and a positive number means that there is a tax shield)?

Select one:

a.$1250

b.$-1250

c.$-2500

d.$2500

15) A project will incur $700 in shutdown costs the year after the completion of the project.The tax rate is 40%.What is the tax shield resulting from these tax-deductible shutdown costs (where a negative number means a cash outflow and a positive number means an incremental cash inflow)?

Select one:

a.$-280

b.$280

c.$240

d.$-240

16) A project has the cash flows shown in the following table.If the cost of capital is 12%, what is the NPV of the project?

Year 01 2 345 6

Incremental Free Cash Flow-968308308308308308126

Select one:

a.$206

b.$244

c.$193

d.$231

17) Which of the following cash flows is NOT a free cash flow associated with a project?

Select one:

a.The funds obtained from selling an old factory if a decision is made to build a new factory.

b.The interest on a loan taken out to build a new factory.

c.Payments to an architect to design a new factory.

d.The costs of building a new factory.

18) A project requires the purchase of new equipment at a cost of $18,000, which will be depreciated over the life of the asset.A further $5000 spent on transport and installation will be added to the purchase price of the equipment for depreciation purposes, and $1000 will be spent on advertising and other operating expenditure to get the project up and running.

What is the value of the asset for depreciation purposes?

Select one:

a.$24,000

b.$19,000

c.$23,000

d.$18,000

19) A project will increase revenue from $1.9 million to $2.6 million.Wages are 50% of revenue.Maintenance on the machine will be $25,000 less than it is on the machine that will be replaced.

What is the incremental revenuethat willresult from accepting this project?

(Hint: This is tricky.Read the question carefully to be sure you understand exactly what this question is asking for.)

Select one:

a.$0.325 million

b.$0.375 million

c.$0.700 million

d.$0.350 million

20) A machine with a purchase price of $11,000 is to be depreciated over its useful working life of 6 years to a book value of zero, using straight-line depreciation.

What is the book value of the machine after 3 years?

Select one:

a.$5400

b.$11000

c.$5500

d.$10900

21) A machine with a purchase price of $6,000 is to be depreciated over its useful working life of 10 years to a book value of zero, using diminishing value depreciation.

What is the amount of depreciation in Year 1?

Select one:

a.$1200

b.$1100

c.$600

d.$300

22) A share is expected to pay an annual dividend of $2.42 next year, and this dividend is then expected to grow at a constant rate of 2.2% p.a. in perpetuity.If the required rate of return is 11.2% p.a., what is the value of the share?

Select one:

a.$21.61

b.$23.71

c.$26.89

d.$27.48

23) A preference share pays a constant dividend of $1.47 and is currently priced at $25.26.The corporate tax rate is 30%.What is the before-tax cost of preference shares?

Select one:

a.0.0507

b.0.0407

c.0.0285

d.0.0582

24) A share has a beta of 1.2.The risk-free rate of return is 2.0% and the expected return on the market is 11.9%.What is the expected return on the share?

Select one:

a.13.88%

b.18.26%

c.13.90%

d.16.28%

25) A firm has three components in its capital structure: debt, preference shares and ordinary shares.The before-tax cost of debt is4.0%, the before-tax cost of preference shares is 7.2%and the before-tax cost of ordinary shares is 12.8%.The proportion of debt in the capital structure is 15%, the proportion of preference shares is 21% and the proportion of ordinary shares is 64%.The corporate tax rate is 30%.

What is the firm's Weighted Average Cost of Capital?

Select one:

a.7.21%

b.9.67%

c.10.30%

d.10.12%