QUESTION 11: Company XYZ just bought a new production machine for GHc 12,243.The amounts paid or shipping,transportation and installation are: GHe 10,560, GH4 7,045 and GHe 5,678 respectively.The company borrowed GHe 20,000 to purchase the machine and undertake other factory works.The loan has a 12.9% interest charge.What is the depreciable basis? A GHc 12,243. B.GHc 35,526. C.GH4 55,526. D.GH4 58,106.

QUESTION 12:The three main reasons why payback period, IRR,NPV and profitability index may conflict are differences in: A.Cash flows,scale of investment and life of investment project B.Cash flows,maturity of investment and life of investment project C. Cash flows, scale of investment and size of investment project. D.Cash inflows,scale of investment and life of investment project.

QUESTION 13:The capitalization rate is a: A Simple average of the costs of debt and equity respectively B.Arithmetic average of the costs of debt and equity respectively C. Weighted average of the costs of debt and equity respectively D.Geometric average of the costs of debt and equity respectively

QUESTION 14:The traditional theory of capital structure states that as the debt ratio increases: A. Cost of capital and value of the company will rise B.Cost of capital will decrease and value of te company will rise C.Cost of capital will rise but value of the company will decrease D.Cost of capital and value of the company will both decrease

QUESTION 15:The optimal capital structure occurs where: A. The cost of capital is maximized and value of the companyis minimized B.Both cost of capital and value of the companyare maximized C Both cost of capital and value of the companyare minimized D.The cost of capital is minimized and value of the company is maximized

QUESTION 16:In perfect markets,capital structure theory assumes that: A.Bankruptcycosts are zero. B.Agencycosts are greater than zero C. Transaction costs are non-zero D.Bankruptcycosts are positive

QUESTION 17:Two examples of bankruptcycosts are: A.Decreased asset values and legal costs. B.Increase d asset values and decreased legal costs. C Decreased asset values and higher legal costs. D.Increased asset values and legal costs.

QUESTION 18:Which of the following is an agencycost? (A).Decreased asset value. (B). Lower market value of the company. (O).Costs of preparing and submirting periodic audied financial and management repors (D).Legal costs of liquidating firm.