I have attached a file with questions that I need answered with workings.

Kind regards

Geoff

Financial Manager Evaluation Instructions: 1. This test has a total of 19 questions over seven pages (including this cover page), consisting both multiple choice and longer questions. 2. The approximate duration needed to complete the test is 2.5 hours 3. All calculations and workings used to derive the answers, including formulas used in computers, should be included in the answer sheet. 4. This evaluation does not rely solely on achieving the right answer. The methodology, logic and systematic working of the problem is often more important. 5. If you have any questions, you may refer to: Name: Lisa Collins Contact: 0892 159577 E-mail: lisacollins@michaelpage.com.au 6. Please submit your answers to the above e-mail by: Date: 1.02.2017 Time: 07.00am 7. Good luck! Page 1 of 3 1. John House has taken a $150,000 mortgage on his house at an interest rate of 7% per year. If the mortgage calls for twenty equal annual payments, what is the amount of each payment? (A) (B) (C) (D) $14,158.94 $10,500.00 $16,882.43 None of the above Use the following to answer questions 3 & 4: You own 100 acres of timberland, with young timber worth $20,000 if logged today. This represents 500 cords of wood at $40 per cord. (cord is a unit of quantity for cut fuel wood.) After logging, the land can be sold today for $10,000 ($100 per acre). The opportunity cost of capital is 10%. You have made the following estimates: (i) (ii) (iii) The price of a cord of wood will increase by 5% per year. The price of land will increase by 3% per year. The yearly growth rate of the cords of wood on your land are: years 1 and 2: 15% years 3 and 4: 10% years 5 through 8: 5% years thereafter: 2% 2. The optimal decision is to log and sell the land after: (A) (B) (C) (D) 3. 4. 8 years 5 years 4 years 3 years The present value of the optimal decision is approximately: (A) $30,000 (B) $32,800 (C) $34,250 (D) $33,830 A project requires an initial investment of $200,000 and is expected to produce a cash flow before taxes of 120,000 per year for two years. [i.e. cash flows will occur at t = 1 and t = 2]. The corporate tax rate is 30%. The assets will be depreciated using the following depreciation schedule: t = 1, 33.33%; t = 2: 44.45%; t = 3: 14.81%; t = 4: 7.4%. The company's tax situation is such that it can make use of all applicable tax shields. The opportunity cost of capital is 12%. Assume that the asset can be sold for book value. Calculate the NPV of the project at the end of two years. (approximately) Page 2 of 3 (A) (B) (C) (D) 5. The NPV of an investment made today is $10,000. If postponed for one year, the NPV at that time will increase by $1,000. Which of the following is correct if the opportunity cost of capital is 12%? (A) (B) (C) (D) 6. $16,510 $19,571 $47,035 None of the above Postpone; the NPV increases by a positive amount. Postpone; the NPV will be larger. Invest now; the NPV does not grow at a sufficient rate. Invest now; always accept positive NPV projects. Project Y-File has the following cash flows: C 0 = +1500, C1 = -1,000, and C2 = -1,000. If the IRR of the project is 21.5% and if the cost of capital is 15%, you would: (A) Accept the project. (B) Reject the project. 7. Consider two mutually exclusive projects with the following cash flows: Projects A B 0 -400 -200 1 +241 +131 2 +293 +172 Choose a project using the IRR rule. The opportunity cost of capital is 9%. (You must show all work in a legible and orderly manner) Page 3 of 3