Question

Two or more projects are mutually exclusive if management
A. can accept one, the other, or neither, but not both projects.
B. can accept both projects or neither, but not one or the other.
C. must accept one or the other but not both projects.
D. must accept one or both projects.
Fix Your Car Auto Repair, Inc., has sales of $2,880,000 and cost of goods sold of $2,140,000. The firm had a beginning inventory of $243,000 and an ending inventory of $142,000. What's the turnover time (in days) of the current inventory?
A. 17.23
B. 24.22
C. 15.81
D. 25.98
The common shares of Jones & Smith, Inc. sell for $22 per share. The firm is expected to set its next annual dividend at $0.68 per share, and all future dividends are expected to grow by 5 percent per year indefinitely. If Jones & Smith, Inc., experiences a flotation cost of 15 percent on new equity issues, what will be the flotation-adjusted cost of equity?
A. 6.63 percent
B. 8.81 percent
C. 7.92 percent
D. 5.87 percent
Happy Clowns, Inc., has a cash balance of $445,000, accounts payable of $234,000, inventory of $144,000, accounts receivable of $411,000, notes payable of $124,000, and accrued wages and taxes of $88,000. How much net working capital does the company need to fund?
A. $554,000
B. $446,000
C. $387,000
D. $614,000
The Miller-Orr model is more realistic than the Baumol model because it
A. treats cash inflows and outflows as random quantities.
B. assumes cash starts from a replenishment level.
C. includes compensation balances.
D. accounts for taxes.

Answer 1

1- In mutually exclusive projects, cash flows of one project can be adversely affected by the acceptance of the other project so we choose one project only so C is correct.

2- formula = (Avg invetory/sales)*365 = (192500/2880000)*365 = 24.22 so option b

3-floation cost of equity formula - R = D1/P0 (1 - f) + g where D1 = .68*1.05 and g = .05,f = .15,P0 = 22

R = 8.82% so option B

4- (CASH+INV+ACCNT REC) AS CURRENT ASSET - CURRENT LIABILITY (NOTES PAY + ACCNT PAYBLE +ACCRUED SALARY AND WAGES)

THIS COMES AS 554000 SO OPTION A

5- Miller model assign probabilities to each cash flow so option A treats cash inflows and outflows as random quantities IS CORRECT.