Financial management test questions
Fall 2016 Name: ____________________
(½*03+0.3*0.1+0.2*0.22)/3=0.136 answer E
Assuming A & b is similar
=4.75+0.80(5.5769)=9.2111 answer D
Eps =$2.40 growth model=d0/(r-g)
5%of 20k+11.5% of 55k+6.25%of 35k=9.5125
None qualifies answer E 5
Value of stock=dividend/r-g
Capm= rf + b(premium)
Future value =p .v(1+R)n
After tax =0.72*656621.63=472767 + discounted 401k =543,662.5
Financial management exam questions and answers
Answer is E
450 shares prices is 12.30
Income, age ,tax ,withdrawal ,rules
Traditional IRA is a personal retirement account through which a person contributes pretax dollars and enables one’s money to increase tax deferred.
Roth IRA is where individuals pay taxes on all money that enters their account but has tax free future withdrawals. It is sensible to individuals who believe that their rate of taxation will be higher in retirement than their current state.
Collective ,individual and group investments
A short sale is the sale of real estate where net proceeds accruing from property sales are less than debts that are secured by liens against properties. The strategy behind short sales is to assist homeowners that may find themselves under water when they are not able to pay for taxes and mortgages. However, the risk is that short sales take too long with one risking losing all his money.
It is reasonable for them to use 10% because Wacc is equitable to the rate of return The reason weight average cost of capital would be used as benchmark to analyze potential cash flow is because it is equal the required rate of return given it represent the opportunity cost in discounting growth model
The weight average cost of capital represent the opportunity cost put into use either as debt or equity by investors or owners.
The primary reason a firm would choose to perform a stock split is to raise capital with the current shareholders and increase the numbers of shares to be able to trade in the stock exchange.
A firm would do a share split to fulfill the obligation of the regulator in meeting requirement for operating in the stock exchange.
It is also a way of consolidating large number of shares floating in the market.
A company would perform a reverse Stock split in order to realize an increment in its share prices.