Accounting &Finance: Financial Management I Model Online Exam

Suppose that a firm deposits Br. 5,000 at the end of each year for four years at 6 per cent rate of interest. What is the present value of this annuity?

•   Br 18,436 

• Br 17,933  

• Br 17,333  

• Br 18,733

Consider a common stock that paid a Br 5 dividend per share at the end of the last year and is expected to pay cash divided every year at a growth rate of 10%. Assume the investor’s required rate of return is 12% .what would be the value of the stock?

  

• Br 275  

• Br 270

• Br 375    

• Br 370

In comparison to industry averages, ABC Corp. has a low inventory turnover, a high current ratio, and an average quick ratio. Which of the following would be the most reasonable inference about ABC Corp.?

• Its inventory level is too high.

• Its cost of goods sold is too low.

• Its cash and securities balance is too low.

• Its current liabilities are too low.

XYZ Co. has sales of $500,000, operating profit of $50,000, interest expense of $10,000, tax expense of $20,000, total equity of $125,000 and total debt of $275,000.  Their return on assets is____.

• 9.5%

• 11% 

• 12%

• 12.5%

Last year ABC Company had sales of br.200 million and its inventory turnover ratio was 5.0. The company’s current assets totaled 100 million and its current ratio was 1.2. What was the company’s quick ratio?

• 1.12                

• 0.87                     

• 0.72                

• 0.59

______ shows the dollar amount investors will pay for $1 of current earnings.

• price-to-earnings ratio 

• Market to Book value ratio    

• Basic Earning Power

• Return on Equity

An investment earns an annual interest rate of 12 percent compounded quarterly. What is the effective annual rate?

• 3.00%. 

• 12.55%. 

• 12.00%.  

• 14.65

If  the cash flows of one project cannot be influenced by the acceptance of the other, the projects are:

• Mutually exclusive projects

• Contingent projects

• Independent projects

• Unrelated projects

A stock you are evaluating paid a dividend of Br. 4 at the end of last year. Dividends have grown at a constant rate of 4% per year over the next 20 years and this constant growth rate is expected to continue for indefinite period. The required rate of return on the stock is 9%. What is the value of this stock?

• 91.35               

• 87.90                    

• 83.20             

• 81.45

________measures the sensitivity of a stock’s returns to changes in returns on the market portfolio.

• Risk           

• Index                   

• Beta                

• Portfolio