You are given the following data for year 1: revenue = 200, cash operating costs = 120, depreciation 20 and the tax rate of 25%. Calculate the after tax operating cash flow (OCF) for the project in year 1

Select one:

a.

$37.5

b.

$80

c.

$65

d.

$45

Stock A has a beta of 1.0 and very high specific risk. If the expected return on the market is 15%, then according to the CAPM the expected return on Stock A will be:

a.

at least 15% if the investor holds only Stock A.

b.

the answer cannot be found without knowing the risk-free rate of interest.

c.

exactly 20%.

d.

more than 15% because of Stock A’s very highspecific risk.

Manufacturing company borrows 4 million euros from the bank to fight the consequences of the corona virus. The repayment schedule is based on an annuity. The interest rate is 8% and the loan is paid back with 4 annual payments.

Question:

* What is the loan balance immediately the first loan payment is made?

(Please present your answers by rounding up to thousands and use thousands as unit of measurement. For example the answer 250920 should be written as 251)

Answer:

US Federal Reserve unexpectedly decreases the monetary policy target rates (federal funds rate) As a result, the value of US government bonds is expected to

Select one:

a.

increase

b.

stay the same

c.

the impact is impossible to determine

d.

decrease

Manufacturing company borrows 10 million euros from the bank to fight the consequences of the corona virus. The repayment schedule is based on an annuity. The interest rate is 6% and the loan is paid back with 4 annual payments.

Question:

* What is the loan balance immediately the first loan payment is made?

(Please present your answers by rounding up to thousands and use thousands as unit of measurement. For example the answer 250920 should be written as 251)

Which of the following investment opportunities has the lowest effective annual return?

Select one:

a.

An investment, which pays 8% nominal interest rate with annual compounding

b.

An investment, which pays 8% nominal interest rate with monthly compounding

c.

There is not enough information to compute effective annual return (EAR)

d.

An investment, which pays 7% nominal interest rate with daily compounding

The company's sales revenue forecast for next year is 1.8 million euros. The net profit margin is estimated at 6%. The company's total assets are forecasted to be 4.0 million euros. Finally, Debt to equity ratio (D/E) is equal to 1.25. Find the company's approximate ROA?

(Please indicate the answer rounded to nearest whole number without percentage mark. For example for ROA=12.461% or ROA= 0.12461 answer should be entered as 12)

The risk-free rate for the next year is 3%, and the market risk premium is expected to be 6%. The beta of XYZ stock is 1.5. If you believe that XYZ’s stock will actually return 12% over the next year, then according to the CAPM you should:

a.

buy the stock because it is under priced.

b.

be indifferent between buying and selling the stock.

c.

sell the stock because it is overpriced.

d.

Sell the stock because it has higher than average systematic risk

Which of the following actions directly decreases the cash conversion cycle (CCC) in a company?

Select one:

a.

Paying back long term bank loan

b.

Extending longer payment periods to the company customers

c.

Paying the suppliers takes less time than before

d.

Increase in the turnover of inventories

Generally, the revenue account for a merchandising business is entitled  

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as  

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

The inventory system employing accounting records that continuously disclose the amount of inventory is called  

The trial balance of Padma Ltd at 31 December 20X2 was as follows:

Additional information

• A loss of $67,870 was recognised on the revaluation of land during 20X2.

• Padma Ltd uses the single statement format for the statement of profit or loss and other comprehensive income.

• Padma Ltd classifies expenses by function.

• Income tax rate is 30%.

• Padma Ltd had the following equity account balances as at 1 January 20X2:

• Padma Ltd issued shares for $150,000 on 20 October 20X2 and paid an interim dividend of $54,000 to shareholders.

Required: i) Prepare the statement of profit or loss and other comprehensive income of Padma Ltd for the year ended 30 June 20X2, showing the analysis of expenses in the statement.

ii) Prepare the statement of changes in equity of Padma Ltd for the year ended 30 June 20X2.

iii) Briefly explain whether a separate presentation of the fair value loss on equity investments in other companies in the statement of comprehensive income is useful to investors.

AN EXAMPLE OF A MULTINATIONAL COMPANY ENTERING A NEW FOREIGN DIRECT INVESTMENT BASED ON REVENUE MOTIVES

Friend2Friend, Inc., a social network provider, is cited by an Internal Revenue Service (IRS) representative for an underpayment of federal income tax. Friend2Friend’s accountants believed that the agency overlooked some of the firm’s legitimate tax deductions and credits. Erin, Friend2Friend’s chief executive officer, wants to challenge the assessment. What are Erin and Friend2Friend’s next steps??

The bank manager's first question is regarding revenue and your process for handling accounts receivables and uncollectible accounts. The bank knows that it is common in your line of business to collect deposits up front for an event but that some events are cancelled or the event is held as planned, but payment is not received in full.

In a 1-2 page memo, address the concerns of the bank manager. Be specific regarding the types of methods that are available for accounting for receivables such as those covered in Chapter 9. Discuss potential ways you could encourage timely payment and/or what your credit terms will be. Give examples where appropriate. Be sure to follow APA format and include in-text citations as well as a reference page following your memo.

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points.

The four steps in the closing procedure are as follows:

STEP 1. Close the revenue account(s) into Income Summary.

STEP 2. Close the expense account(s) into Income Summary.

STEP 3. Close the Income Summary account into the Capital account, transferring the net income or net loss to the Capital account.

STEP 4. Close the Drawing account into the Capital account.

The adjusted trial balance for Maria's Beauty Spa is listed below:

1.) Using this information above, journalize the four closing entries.

For compound entries, if an amount box does not require an entry, leave it blank.

A post-closing trial balance consists of the final balances of the accounts remaining open. It is the final proof that the debit balances equal the credit balances before the posting for the new fiscal period begins.

Below is the information of Maria's Beauty Spa:

2.) Prepare a post-closing trial balance for Maria’s Beauty Spa. List all the accounts in the proper order as described in the textbook. If an amount box does not require an entry, leave it blank.

A widget machine will cost $480,000. The anticipated increase in revenue will be $140,000/year for 5-years. Annual expenses will be $30,000/year for 5-years. The depreciable life is estimated to be 5-years and the salvage value will equal $35,000. Additional inventory necessary to run the machine will be $26,000. Initial training expenses are $20,000. Tax rate equals 40%. A.  Find the discounted payback and convert this into a percentage.