SHOW YOUR CALCULATIONS

1. Choose which one of the following financial instruments generally provides the largest source of short-term credit for small firms?

A. Notes payable

B. Commercial paper.

C. Trade credit.

D. Accruals

2. AXN Sdn Bhd needs to raise RM1, 000,000 in short-term loan for five months. loan from OCBC bank at discounted interest rate of 12% per annum and a 20% compensating balance. The present account balance in the company is RM 100,000. Compute the effective cost of financing

A. 16%

B. 14.12%

C. 42.12%

D. 16.92%

3. AXN Sdn bhd needs to raise RM1, 000,000 in short-term loan for five months. a commercial paper with a face value of RM 100,000 each at 12% per annum. The issuing cost is RM3,000 per paper. Compute the effective cost of financing

A. 20.87%

. 29.23%

C. 13.04%

D. 11.49%%

4. Issue a 10% RM100 par value of the preferred share .The current market price of the preferred share is RM80 per share. The floatation cost is at 5% of the par value . Calculate the cost of financing

A. 14.93%

B. 13.33%

C. 13.16%

D. 10.53%

5. Issue a RM 1,000 par value bonds that pays 9% annual interest and matures in 5 years. The market value of the bond is RM 950, and the floatation cost is 10% of the market value. Calculate the cost of financing assuming the tax rate of the company is 25%.

A. 13.67%

B. 13.14%

C. 10%

D. 9.6 %

6. What is the component cost of common shares for a share selling for RM70, which currently pays a dividend of RM 8, with an expected constant growth rate of 6% and flotation costs of 5% of the selling price?

A. 18.8%

B. 13%

C. 18%

D. 16%

7. The mixture of long-term debt, preferred shares, and common equity used to finance a business is called

A. financial structure.

B. permanent assets.

C. spontaneous liabilities.

D. capital structure.

8. A project whose acceptance requires the acceptance of one or more alternative projects is referred to as __________.

A. mutually exclusive projects

B. independent projects

C. a dependent project

D. None of the above

9. Glade Berhad estimated that its inventory requirement for next year is 100,000 units. The Purchase price is RM5 per unit and the inventory will be delivered two weeks after placing the order. Historically, the carrying cost per unit is 10% of the purchase price of the goods and the cost per order is RM35. orders must be placed in multiple of 100 units and the desired safety stock is 1500 units. (assume there are 50 weeks in a year). Determine the EOQ level.

A. 3741.66

B. 3750

C. 3800

D. 3600

10. Based on Question 10 , calculate the Total Inventory Costs

A. RM 2620.83

B. RM 2625

C. RM 2621.05

D. RM 2622.22