QUESTION 1

CBRE Group Ltd. is mulling over calling ' 76.876 crores of 3.670 years, ' 443 security gave 4.89756 years prior with a coupon financing cost of 76.986%.

The bonds have a call cost of ' 145 and had at first gathered continues of ' 2.91 crores because of a rebate of ' 30 for each bond. The underlying coasting cost was ' 6456.

The Company expects to sell ' 345crores

of 76.75% coupon rate, 45.567 years securities to raise assets for resigning the old securities. It proposes to sell the new bonds at their standard worth of ' 5564 The assessed floatation cost is ' 4,965659. The organization is settling8.870% assessment and its after charge cost of obligation is 8%. As the new bonds should initially be sold and their returns, at that point used to resign old bonds, the organization expects a two months time of covering interest during which interest should be paid on both the old and new bonds. What is the possibility of discounting bonds?

2. Flyn Company?s budgeted sales for the coming year are expected to be $50,000,000, of which 75% are expected to be credit sales at terms of n/30. Flyn estimates that a proposed relaxation of credit standards will increase credit sales by 25% and increase the average collection period from 20 days to 30 days. Based on a 360-day year, the proposed relaxation of credit standards will result in an expected increase in the average accounts receivable balance of

a.$520,833

b.$1,822,917

c.$2,083,333

d.$3,906,250

3. Management accounting differs from financial accounting in that financial accounting is

a.More oriented toward the future

b.Primarily concerned with external financial reporting.

c.Primarily concerned with non quantitative information.

d.Heavily involved with decision analysis and implementation of decisions.

4. When a company analyzes credit applicants and increases the quality of the accounts rejected, the company is attempting to

a.Maximize sales.

b.Increase bad-debt losses.

c.Increase the average collection period.

d.Maximize profits.

5. A company plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and reduce the ratio of credit sales to total revenue from 70 to 60%. The company estimates that projected sales would be 5% less if the proposed new credit policy were implemented. The firm?s short-term interest cost is 10%.

What effect would the implementation of this new credit policy have on income before taxes?

a.$2,500,000 decrease.

b.$2,166,667 decrease.

c.$ 83,334 increase.

d.$ 33,334 increase.

6. A change in credit policy has caused an increase in sales, an increase in discounts taken, a decrease in the amount of bad debts, and a decrease in the investment in accounts receivable. Based upon this information, the company?s

a.Average collection period has decreased.

b.Percentage discount offered has decreased.

c.Accounts receivable turnover has decreased.

d.Working capital has increased.

7. Under the law of suretyship, which are generally among the rights that the surety may use? I. Subrogation. II. Exoneration. III. Reimbursement from debtor.

a.I only

b.III only.

c.I and II only.

d.I, II, and III.

8. Visor Co. maintains a defined benefit pension plan for its employees. The service cost component of Visor pension expense is measured using the

a.Unfunded accumulated benefit obligation

b.Unfunded vested benefit obligation.

c.Projected benefit obligation.

d.Expected return on plan assets.

9. A company provides fertilization, insect control, and disease control services for a variety of trees, plants, and shrubs on a contract basis. For $50 per month, the company will visit the subscriber?s premises and apply appropriate mixtures. If the subscriber has any problems between the regularly scheduled application dates, the company?s personnel will promptly make additional service calls to correct the situation. Some subscribers elect to pay for an entire year because the company offers an annual price of $540 if paid in advance. For a subscriber who pays the annual fee in advance, the company should recognize the related revenue

a.When the cash is collected.

b.Evenly over the year as the services are performed.

c.At the end of the contract year after all of the services have been performed.

d.At the end of the fiscal year.

10. A party contracts to guaranty the collection of the debts of another. As a result of the guaranty, which of the following statements is correct?

a.The creditor may proceed against the guarantor without attempting to collect from the debtor.

b.The guaranty must be in writing.

c.The guarantor may use any defenses available to the debtor.

d.The creditor must be notified of the debtor's default by the guarantor