Net Present Value and New Machine
DEPARTMENT OF ACCOUNTING AND FINANCE
AFC2140 CORPORATE FINANCE
MID-SEMESTER TEST
FIRST SEMESTER 2012
SURNAME (FAMILY NAME)_____________________________________________
GIVEN NAME(S)______________________________________________________
ID NUMBER__________________________________________________________
TUTOR’S NAME______________________________________________________
TUTORIAL DAY AND TIME______________________________________________
INSTRUCTIONS:
TIME ALLOWED: 90 MINUTES WRITING TIME AND 5 MINUTES READING TIME
•
CLOSED BOOK TEST
•
ANSWER ALL 3 QUESTIONS (AND IN THE SPACES PROVIDED)
•
A FORMULA SHEET IS INCLUDED AT THE BACK
OFFICE USE ONLY
QUESTION
1
2
3
TOTAL (OUT OF 60)
MARK
Question 1 (30 Marks)
This question consists of 15 multiple-choice questions. For each multiplechoice question, choose the one correct answer from the four alternatives given by circling the correct letter A, B, C, or D on page 6. Each multiplechoice question counts as 2 marks, giving a total of 30 marks for Question 1.
1. Which one of the following is a capital budgeting decision?
A. determining how many shares of stock to issue
B. deciding whether or not to purchase a new machine for the production line
C. deciding how to refinance a debt issue that is maturing
D. determining how much inventory to keep on hand
2. Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?
A. decrease in the per unit production costs
B. increase in the number of shares outstanding
C. decrease in the net working capital
D. increase in the market value per share
3. Which of the following can help align the behaviour of managers with the goals of shareholders? A. management compensation
B. managerial labour markets
C. an independent board of directors
D. all of the above
4. Your mother is trying to choose one of the following bank term deposits to invest
$10,000. Which one will
AFC2140 CORPORATE FINANCE
MID-SEMESTER TEST
FIRST SEMESTER 2012
SURNAME (FAMILY NAME)_____________________________________________
GIVEN NAME(S)______________________________________________________
ID NUMBER__________________________________________________________
TUTOR’S NAME______________________________________________________
TUTORIAL DAY AND TIME______________________________________________
INSTRUCTIONS:
TIME ALLOWED: 90 MINUTES WRITING TIME AND 5 MINUTES READING TIME
•
CLOSED BOOK TEST
•
ANSWER ALL 3 QUESTIONS (AND IN THE SPACES PROVIDED)
•
A FORMULA SHEET IS INCLUDED AT THE BACK
OFFICE USE ONLY
QUESTION
1
2
3
TOTAL (OUT OF 60)
MARK
Question 1 (30 Marks)
This question consists of 15 multiple-choice questions. For each multiplechoice question, choose the one correct answer from the four alternatives given by circling the correct letter A, B, C, or D on page 6. Each multiplechoice question counts as 2 marks, giving a total of 30 marks for Question 1.
1. Which one of the following is a capital budgeting decision?
A. determining how many shares of stock to issue
B. deciding whether or not to purchase a new machine for the production line
C. deciding how to refinance a debt issue that is maturing
D. determining how much inventory to keep on hand
2. Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?
A. decrease in the per unit production costs
B. increase in the number of shares outstanding
C. decrease in the net working capital
D. increase in the market value per share
3. Which of the following can help align the behaviour of managers with the goals of shareholders? A. management compensation
B. managerial labour markets
C. an independent board of directors
D. all of the above
4. Your mother is trying to choose one of the following bank term deposits to invest
$10,000. Which one will