Question

Question 1

Your friend from Netherlands is planning to visit you in the United States. You estimate the cost of her trip at $6,781. What is the cost to her in euros if 1 Euro = $1.2001?

Question 2

You are planning to visit Japan in December. You estimate the cost of your trip to be $820. How many yen do you need to buy if the exchange rate is 1$ = 123.1 yen?

Question 3

ABC Company has projected Sales of $1,442 in January. The sales are expected to grow by 10% each month. ABC's collection schedule is as follows:

ABC collects 37 percent of its sales in the month of sale and the remainder is collected in the following month. What is the amount of the February cash collections?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 4

ABC Company sells 2,788 chairs a year at an average price per chair of $146. The carrying cost per unit is $33.88. The company orders 572 chairs at a time and has a fixed order cost of $41.3 per order. The chairs are sold out before they are restocked. What are the total carrying costs?

Enter your answer rounded off to two decimal points. Do not enter comma or $ in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

Question 5

You are given the following quotes:

U.S. dollar/Mexican Peso = 0.3188

U.S. dollar/Australian Dollar = 0.7315

U.S dollar/Chinese Yuan = 0.1675

What is the Chinese Yuan/Australian Dollar cross rate?

Enter your answer rounded off to FOUR decimal points.

Question 6

Annual demand                      150,980 units

Carrying costs                         $0.14 per unit

Fixed Costs per order             $5

Number of orders                    26

What are the total costs?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.

Question 7

ABC Company's last dividend was $3.8. The dividend growth rate is expected to be constant at 7% for 4 years, after which dividends are expected to grow at a rate of 4% forever. The firm's required return (r_s) is 8%. What is its current stock price (i.e. solve for Po)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 8

Suppose that today's stock price is $42.31. If the required rate on equity is 19.2% and the growth rate is 9.6%, compute the expected dividend (i.e. compute D1)

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 9

The terms of sale are 4/14, net 64. What is the effective annual rate of interest?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

Question 10

A company sells 152,303 units per year. Fixed costs per order are $166 and carrying cost is $21 per unit per year. What is the Economic Order Quantity?

Enter your answer rounded off to two decimal points.

Question 11

ABC’s last dividend paid was $0.44, its required return is 14%, its growth rate is 4%. What is ABC's expected stock price in 11 years?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 12

Suppose you have the following information:
$1 = £0.6818
$1 = C$1.4044
What is the £/C$ cross rate?

Enter your answer rounded off to FOUR decimal points. Do not enter any currency sign in the answer box.

Question 13

The common stock of ABC Industries is valued at $71.9 a share. The company increases their dividend by 3 percent annually and expects their next dividend to be $4.09. What is the required rate of return on this stock?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question4

ABC Inc. last paid an annual dividend of $3.4.The dividends are expected to grow by 5.2% each year. What is the amount of expected dividend in Year 19. That is, what is D19?

Enter your answer rounded off to two decimal points. Do not enter $ in the answer box.

Question 15

A company sells 122,113 units per year. Fixed costs per order are $117 and carrying cost is $38 per unit per year. If management uses an EOQ model, how many orders will it place per year?

Enter your answer rounded off to two decimal points.

Question 16

ABC Inc.'s stock is currently selling for $71.94 per share. The company just paid its first annual dividend of $4.35 a share. The firm plans to increase the dividend by 3.3 percent per year indefinitely. What is the required rate of return on equity?

Enter your answer in percentages rounded off to two decimal points.

Question 17

The exchange rates in New York are: $1 = AUD 1.2137 and $1 = £0.6586

A dealer is offering a quote: AUD 1 = £0.8445.

What is the profit you can earn on $17,440 using triangle arbitrage?

Enter your answer round off two two decimal points.

Question 18

ABC’s next dividend is expected to be $2.16, its required return is 16%, its growth rate is 5%. What is ABC's expected stock price in 6 years?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 19

The terms of sale are 6/7, net 62. What is the effective annual rate of interest?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

Question 20

ABC Company has annual sales of $148,878 and cost of goods sold of $57,920. The average accounts receivable balance is $48,442. How many days on average does it take the firm to collect its accounts receivable? That is, what is the AR Period?

Assume 365 days.

Enter your answer rounded off to two decimal points

Question 21

Identify a use of cash from below. Choose only one.

		decrease in inventory
		decrease in accounts receivable
		decrease in fixed assets
		decrease in accounts payable
		increase in long-term debt

Question 22

Identify which of the following will increase the operating cycle. Choose only one.

		decrease in accounts receivable turnover ratio
		increase in cash cycle
		decrease in inventory period
		increase in accounts payable turnover ratio
		decrease in accounts payable period

Question 23

ABC Company writes 30 checks a day for an average amount of $637 each. These checks generally clear the bank in 6 days. In addition, the firm generally receives an average of $12,044 a day in checks that are deposited immediately. Deposited funds are available in 2 days. What is the firm's net float?

Question 24

Currently, you own 10% of the outstanding stock of ABC Company. The company has decided to issue additional shares of stock and has given you the first option to purchase 10% of those additional shares. Which one of the following will you be participating in if you opt to purchase the shares you have been offered?

		Rights offer
		Red herring offer
		Private placement
		IPO
		General cash offer

Question 25

Venture capital is most appropriate to be the source of funding for which one of the following? Choose only one

		Global expansion for an established, profitable firm
		New, high-risk venture
		Daily operations for an established, profitable firm
		Bankruptcy reorganization
		Seasonal production

Answer 1

1) Cost of trip in dollars , c1 = $6781

1 Euro = $1.2001

$1 = 1/1.2001 euros

cost of trip in euros = c1*$1 = 6781 *1/1.2001 euros = 5650.36247 euros or 5650.36 euros ( rounding off to 2 decimal places)

2)

cost of trip , c1 = $820

exchange rate , $1 = 123.1 yen

no. of yen = c1*exchange rate = 820*123.1 = 100942

3)

sales in January , s1 = $1442

increase in sales per month , i = 10% = 0.10

sales in February , s2 = s1*(1+i) = 1442*1.1 = $1586.20

cash collection for february = [(1-37%)*s1] + [37%*s2] = [(1-0.37)*1442] + [0.37*1586.20] = 908.46 + 586.894 = 1495.354 or 1495.35 ( rounding off to 2 decimal places)