16. IHK Co. just suffered a decrease in revenue of 10%. In response, operating income and net income both declined by 25%. Which of the following is TRUE about IHK Co.?

A. The company has high operating leverage but no financial leverage.

B. The company has no operating leverage but high financial leverage.

C. The company has high operating leverage and high financial leverage.

D. The company has no operating leverage and no financial leverage.

17. Which actions will be appropriate to make use of the surplus?

A. Pay supplier earlier to take advantage of any prompt payment discounts

B. Buy back the company's shares

C. Increase payables by delaying payment to suppliers

D. Invest in a long term deposit bank account

18. Deviations in monetary policy will impact which factors?

1 Level of exchange rates 2 Cost of finance 3 Level of consumer demand 4 Level of inflation

A. 1 and 2 only

B. 2 and 3 only

C. 2, 3 and 4 only

D. 1, 2 and 3 and 4

19. An increase in IHK Corp's cash conversion cycle and a decrease in IHK's operating cycle could result from:

A. Cash conversion cycle increase Operating cycle decrease

B. Decreased receivables turnover Increased payables turnover

C. Decreased receivables turnover Decrease in days of inventory

D. Increased inventory turnover Increased payables turnover

20. Which of the following is NOT a result of rapid business expansion?

A. An rise in the current ratio

B. A rapid growth in revenue

C. A rapid upsurge in the volume of current assets

D. Increase in current assets being f inanced by credit

21. Which of the regarding the valuation of bonds is correct?

A. When interest rates rise so that the required rate of return increases, the market value of the bond will rise.

B. The market value of a discount bond is greater than its face value during a period of increasing interest rates.

C. When the market rate of return is less than the stated coupon rate, the market value of the bond will be more than its face value, and the bond will be selling at a premium.

D. For a given change in the required return, the shorter a bond's maturity, the greater the change in the market value of the bond.

22. IHK plans to buy a contraption costing $. 18,000 to save on labor costs. $. 9,000 in labor cost will be saved in the first year and labor rates in the second year will rise by 10%. The assessed average annual rate of inflation is 8% and the real cost of capital is estimated at 12%. The contraption has a two -year life with salvage value of $ 5,000 receivable at the end of year 2. All cash f lows arise at the year end. What is the NPV of the investment?

A. $. 360

B. $. 376

C. $. 600

D. some other answer

23. IHK Co. just suffered a decrease in revenue of 10%. In response, operating income and net income both declined by 25%. Which of the following is TRUE about IHK Co.?

A. The company has high operating leverage but no financial leverage.

B. The company has no operating leverage but high financial leverage.

C. The company has high operating leverage and high financial leverage.

D. The company has no operating leverage and no financial leverage.

24. IHK Co. has a beta of 1.1, a marginal tax rate of 35%, and a debt-to-assets ratio of 40%. IHK Co. management is weighing an entry into the restaurant business. They have identif ied a publicly traded company in the industry that has an equity beta of 1.3, a marginal tax rate of 28%, and a debt-to-equity ratio of 40%. The correct beta for IHK Co. to use in calculating the cost of equity capital for the analysis of the prospective entry into the restaurant business is closest to

A. 1.15.

B. 1.30.

C. 1.45.

D. none of the above

25. IHK Co share values during the year ended 31 December 2019:At start of 2019 $. 2.50 and went as high as $. 3.15 and as low as 2.40 It closed at $. 3.00 year end IHK Co paid a total dividend of $. 0.15 per share. What is the total shareholder return for 2017?

A. 26%

B. 21%

C. 22%

D. 36%

26. A shorter operating cycle will most likely result to which of the following changes in a company's working capital management?

A. Decreasing stock-outs by carrying greater quantities of inventory. Extending its payables by paying on the last allowed date.

B. Changing its credit terms from 2/10, net 60 to 2/10, net 30.

C. Increasing short term investments.

27. A company is using the net present value (NPV) and internal rate of return (IRR) methods to evaluate a project for his company. Af ter its initial cash outf low, the project will produce several years of cash inf lows, but will require a net cash outf low in the last year. The dif ficulty of the company is most likely to meet when using the NPV or IRR methods for this analysis is:

A. numerous IRRs.

B. contradictory NPV and IRR project rankings.

C. no problem will be encountered

D. negative NPV.

28. Which is not an advantage of having a centralized treasury department in a large international group of companies?

A. No need for treasury skills to be duplicated throughout the group

B. Necessary borrowings can be arranged in bulk, at keener interest rates than for smaller amounts

C. The group's foreign currency risk can be managed much more ef fectively since they can appreciate the total exposure situation

D. Divisional managers will be motivated by having less responsibility for cash management

29 A company buys an apparatus for $. 10,000 and vends it for $. 2,000 at time 3. operating costs of the machine is time 1 = $. 3,000; time 2 = $. 5,000; time 3 = $. 7,000. If a series of apparatuses are bought, run, and traded on an endless cycle of replacements, what is the corresponding annual cost of the machine if the discount rate is 10%?

A. $. 20,114

B. $. 8,992

C. $. 8,288

D. $. 7,471