8. Financial management division will normally carry out which of the following

A. Assessing planned expansion plans

B. Evaluation of overtime expenditure

C. Depreciation of non-current assets

D. Allocating overheads to cost units

9. With respect to the internal rate of return , which of the following assertions is most correct?

A. The IRR is the discount rate that maximizes a project's net present value.

B. A suitable decision rule is to accept the project if IRR is less than the requisite rate of return.

C. IRR is the discount rate at which the present value of expected future af ter tax cash f lows is the same as the investment outlay.

D. IRR is supreme over other capital budgeting calculations

10. A manager made the following statements to a group of investors about agency costs. Which of the statements does NOT correctly describe a facet of agency costs?

A. arise as a consequence of management's desire to use company assets for its personal gain and the owners' desire to maximize the value of the company.

B. minimized when the owners of a company and the management of a company are the same.

C. occur as a result of stockholders' desire to increase the price of the common stock and debtholders' desire to secure interest payments.

D. do not have any bearing on the overall value of the company

11. Which of the following statements accurately describes leverage and capital structure?

A. If a company does not depend heavily on operating leverage, then the company's f ixed costs are a relatively small proportion of total costs.

B. An rise in the corporate tax rate will not change the way a corporation raises capital.

C. A company exposed to substantial business risk is more likely to use f inancial leverage than a company with little business risk.

D. If a company increases its f inancial leverage, the operating leverage wi ll increase in a comparable proportion.

12. If projected cash f lows are less certain than the overall cash flows, the net present values of projects should use:

A. marginal cost of capital.

B. a lesser marginal cost of capital

C. a greater marginal cost of capital

D. additional data is needed

13. IHK is an all equity f inanced company. It paid dividend of $. 50m; Earnings retained and invested 70% Return on investments 15% Cost of equity 35%What is the market value of the company?

A. $. 481m

B. $. 250m

C. $. 221m

D. $. 218m

E. Some other answer

14. IHK bought goods costing $. 2,500. The terms of trade is that paymentmust be received in three months time. However, a discount of 1.5% will be if paid within one month.Compute the annual percentage cost of paying within three months? *

A. 6.23%

B. 9.54%

C. 6.10%

D. 9.49%