中国传统节日文化
Faculty of Economics and Business Academic year 2014-2015 On the first page of this exam form you will find important information about this
exam.
Plea read the information below before answering any exam questions!
Exam: Financiering (6011P0122) and Finance (6011P0135)
Date and time of the exam: Tuesday, April 21
Duration of the exam: 1 ½ hour
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Warning against cheating: Do not cheat! Students who are caught in any form of cheating will be punished, the maximum punishment being exclusion from all exams for a period of one year.
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During the exam you are not allowed to go to the toilet without the prior connt of
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Tools allowed:<pencil, pen, erar, ruler, (non-graphic) calculator, dictionary.> Specific information on this exam: <15 multiple choice questions equally weighted.>
Version code 1
Plea fill in the version code on your answer sheet before you start.
On the answer sheet, Answer A corresponds with 1, B with 2, C with 3 and D with 4 The results of thi
s exam will be published within 15 working days following the date of the exam. If the re-sit is scheduled to take place within 6 weeks following the current exam, the results of the current exam will be published within 12 working days.
Inspection of the exam: <on request by e-mail>
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Good luck!
Question 1
Which of the following statements is most correct?
A) An advantage to incorporation is that it allows for less regulation of the business.
B) An advantage of a corporation is that it is subject to double taxation.
C) Unlike a partnership, a disadvantage of a corporation is that it has unlimited liability.
D) Corporations face more regulations when compared to partnerships.
Answer: D
Question 2
Consider three curities that pay risk-free cash flows over the next three years.
Security: Cash Flow in one year Cash Flow in two years Cash flow in three years B1 $100 $0 $0
B2 $0 $0 $100
B3 $0 $100 $0
If the current risk-free interest rate were 10%, what is the no-arbitrage price of a curity that pays cash flows of $100 in one year, $100 in two years and $300 in three years?
A)$331.32
B)$398.94
C)$248.68
D)$413.96
Answer B: First calculate the prent values of all curities:
PPPP BB1$1001.1=$90.91 ; PPPP BB2$1001.13=$75.13 ; PPPP BB3$1001.12=$82.64
Now match the cash flows per year to mimic the curity:
No−arbitrage price=$90.91+$82.64+3∗$75.13=$398.94
Question 3
In early 2010, Apple Inc. had a book value of equity of $205 billion, 10.5 billion shares outstanding, and a market price of $35.80 per share. Apple also had cash of $70 billion and total debt of $112 billion.
Apple’s Enterpri Value in early 2010 was clost to?
A)$375.9 billion
B)$333.9 billion
C)$374.93 billion
D)$417.9 billion.
Answer d: EV=Market capitalization+Total Debt−Cash
EV=10.5∗$35.8+$112−$70=$417.9 billion
Question 4
Which of the following adjustments to net income is not correct if you are trying to calculate cash flow from operating activities?
A) Add increas in accounts payable
B) Add back depreciation
C) Add increas in accounts receivable
D) Deduct increas in inventory
Answer: C
Question 5
Analysts often classify firms with high market-to-book ratios as:
A)Value Stocks
B)Promising Stocks
C)Investment Grade Stocks
D)None of the above.
D) The are growth stocks Answer d: page 28
Question 6
Consider the two following two statements:
I: If the discount rate is negative, you’d rather have a certain dollar tomorrow than today.
II: You can ignore compounding or discounting when evaluating the prent value of a project that only takes 1 year.
Of the statements
A)I is true, II is fal;
B)I is fal, II is true
记念刘和珍君教案C)Both are true
D)Both are fal
Answer: Correct answer: A
Question 7
Suppo, you want to be a millionaire in 10 years. How much will you have to put aside each year at the end of the year in order to become one? Assume that the interest rate is 7% and your first deposit is at the end of this year. The minimal amount you will have to put aside each year is clost to:
A) €72,378.
B) €75,868.
C) €100,000.
D) €142,378.
Correct answer: A
Answer: Ann=FV*r/((1+r)^n-1) =1,000,000*0.07/(1.07^10-1)=72,378
Question 8
Consider a curity that pays €750 per year for the next 20 years. The first payment is today and the discount rate is equal to 4.5%. The value of this curity today is clost to:
A) €9,445.
B) €9,756.
C) €10,195.
D) €10,506.
Correct answer: C
Correct answer: C
Answer: PV=Ann*(1-(1+r)^(-n))/r*(1+r)=750*(1-1.045^(-20))/0.045*1.045=10,195 Question 9
Suppo you want the highest interest possible on you savings account at which you deposit €1,000 today. You withdraw this amount after one year. Which savings account would you choo out of the following? The given interest rates are Annual Percentage Rates (APR).
A) 10.4% per year compounded annually.
B) 10.3% per year compounded mi-annually.
C) 10.1% per year compounded quarterly.
D) 10% per year compounded daily.
Correct answer: B
Answer: gross interest p.a. = (1+r/m)^m - 1 , with m periods in a year
For A: 10,4%
For B: 10,565%
For C: 10.489%
For D: 10.516% (m=365)
Question 10
You have an investment opportunity in Germany that requires an investment of $250,000 today and will produce a cash flow of €208,650 in one year with no risk. Suppo the risk-free rate of interest in Germany is 6% and the current competitive exchange rate is €0.78 to $1.00. What is the NPV of this project in dollars? Would you take the project?
A) NPV = 0; No
B) NPV = -$2,358; No
C) NPV = $2,358; Yes
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D) NPV = $13,650; Yes
Answer: C
Explanation: C) NPV = -250,000 + (€208,650 / 1.06) × $1.00 / €0.78 = $2358, so since NPV > 0, accept
Question 11
You are considering investing in a start-up project at a cost of $100,000 now. You expect the project to return a one-time cash flow of $500,000 to you ven years from now. Given the risk of this project, your opportunity cost of capital is 20%.
The decision you should take regarding this project is:
A) reject the project since the NPV is negative.
B) reject the project since the NPV is positive.
C) accept the project since the IRR < 20%.
D) accept the project since the IRR > 20%.
Answer: D
Explanation: D) IRR= - 1 = .25849895
NPV = -100,000 + 500,000/(1.20)7 = 39,540.82
Therefore we should accept becau NPV > 0 and becau IRR > 20%.
Question 12
Which of the following statements is FALSE?
A) In general, the difference between the cost of capital and the IRR is the maximum amount of estimation error in the cost of capital estimate that can exist without altering the original decision.
B) If the cost of capital estimate is more than the IRR, and the project is characterized with first (a) negative cash flow(s) followed by positive cash flows, the NPV will be positive.
C) If you are unsure of your cost of capital estimate, it is important to determine how nsitive your a
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nalysis is to errors in this estimate.
D) The IRR can provide information on how nsitive your analysis is to errors in the estimate of your cost of capital.
Answer: B
Explanation: B) If the cost of capital estimate is more than the IRR, and the NPV is a negative function of the discount rate, the NPV will be negative.
Question 13
Consider a project with the following cash flows:
Year Cash Flow
0 -10,000
1 4,000
迅雷成吉思汗2 4,000
3 4,000
4 4,000
Assume the appropriate discount rate for this project is 15%. The profitability index for this project is clost to:
A) .14
B) .22
C) .60
D) .15
Answer: A
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Explanation: A) NPV = -10,000 + + + + = $1420
PI = NPV/investment = 1420/10000 = .1420
Question 14
Which of the following statements is FALSE?
A) Becau value is lost when a resource is ud by another project, we should include the opportunity cost of that resource as an incremental cost of the project.
B) Sunk costs are incremental with respect to the current decision regarding the project and should be included in its analysis.
C) Overhead expens are associated with activities that are not directly attributable to a single business activity but instead affect many different areas of the corporation.
D) When computing the incremental earnings of an investment decision, we should include all changes between the firm's earnings with the project versus without the project. Answer: B
Question 15
Taggart Transcontinental is considering adding a trucking division to expand the coverage of its existing rail lines. The trucking division will cost $1,000,000 upfront and is expected to generate free cash flows of $100,000 at the end of each of the next five years. Taggart Transcontinental forecasts that future free cash flows after year 5 will grow at 2% per year, forever. Taggart Transcontinental's c
ost of capital is 10%.
The NPV for the trucking division is clost to:
A) 170,750
三番是什么意思B) 200,000
跑步的作文C) 212,550
D) 250,000
