Managerial Finance Final Exam
Which of the following is NOT normally regarded as being a barrier to hostile takeovers? (Points : 5) | Abnormally high executive compensation Targeted share repurchases Shareholder rights provisions Restricted voting rights Poison pills |
2. (TCO F) Which of the following statements is correct? (Points : 5) | The MIRR and NPV decision criteria can never conflict. The IRR method can never be subject to the multiple IRR problem, while the MIRR method can be. One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption. The higher the WACC, the shorter the discounted payback period. The MIRR method assumes that cash flows are reinvested at the crossover rate. |
A; $37.05
YR1 Dividend =1.57325(1.55*1.015)
YR2 Dividend =1.5968(1.57325*1.015)
After Year 2 stock price will be = 43.11 (1.5968*1.08/(.12-.08)
1.57325/1.12+1.5968/1.12 2 +43.11/1.12 2 =37.05
4. (TCO G) The ABC Corporation's budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount.
The remaining 60% pay in the month following the sale and don't receive a discount.
ABC's bad debts are very small and are excluded from this analysis.
Purchases for next month's sales are constant each month at $2,000. Other payments for wages, rent, and taxes are constant at $500 per month.
Construct a single month's cash budget with the information given. What is the average cash gain or (loss) during a typical month for the ABC Corporation? (Points : 20)
Current month sales collected: 4000 x 40% x (100%-(3%) = $1552
+ Prior month sales collected: 4000 x 60% = $2400
- Purchases $2000
- Other expenses $500
= $1452 average cash gain during a typical month.
5. (TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants
2. (TCO F) Which of the following statements is correct? (Points : 5) | The MIRR and NPV decision criteria can never conflict. The IRR method can never be subject to the multiple IRR problem, while the MIRR method can be. One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption. The higher the WACC, the shorter the discounted payback period. The MIRR method assumes that cash flows are reinvested at the crossover rate. |
A; $37.05
YR1 Dividend =1.57325(1.55*1.015)
YR2 Dividend =1.5968(1.57325*1.015)
After Year 2 stock price will be = 43.11 (1.5968*1.08/(.12-.08)
1.57325/1.12+1.5968/1.12 2 +43.11/1.12 2 =37.05
4. (TCO G) The ABC Corporation's budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount.
The remaining 60% pay in the month following the sale and don't receive a discount.
ABC's bad debts are very small and are excluded from this analysis.
Purchases for next month's sales are constant each month at $2,000. Other payments for wages, rent, and taxes are constant at $500 per month.
Construct a single month's cash budget with the information given. What is the average cash gain or (loss) during a typical month for the ABC Corporation? (Points : 20)
Current month sales collected: 4000 x 40% x (100%-(3%) = $1552
+ Prior month sales collected: 4000 x 60% = $2400
- Purchases $2000
- Other expenses $500
= $1452 average cash gain during a typical month.
5. (TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants