Accounting
MCQs
6.a
2005 data in millions.
Current assets = 144
Current liabilities = 132
Net working capital =?
= Current assets – current liabilities
= 144 -132
NWC = 12
7.c
Shares in 2006 = 10.2 million
Price per share = $16
Market value share = $- * 16 = $ 163,200,000
Book value equity share = 12.6 million = $ 126,600,000
Market to book equity ratio = Market value / book value
=-/-
M/B ratio= 1.289
8.d
2006 data.
Long term debt = 406,500,000
Equity = 126,600,000
Long term debt to equity ratio = LT debt / equity
=- /-
LT debt to equity = 3.21
9.a
Market value represent history.
10.b
Net income = 10.6 million = 10,600,000
Common shares outstanding = 10.2 million = 10,200,000
Earnings per share = EPS = Net income / Common shares outstanding
= 10,600,000 / 10,200,000
EPS = 1.0392
11.d
EBIT = 41.2
Depreciation and amortization expense = 3.6
EBITDA = EBIT + Dep. & amortization
= 41.2 + 3.6
EBITDA = 44.8 million
12.c
Net income = 10.6 million = 10,600,000
Shareholder equity = 126.6 million= 126,600,000
ROE=?
ROE = Net income / Shareholder equity * 100
= 10,600,000 / 126,600,000 * 100
= 0.08373 * 100
ROE = 8.37%
13.c
Signing bonus = $-
Payment = FV = $-
R = 7%
n = 3 years
PV = FV/ (1 +r)^n
= $-/ (1 + 0.07) ^3
= $-/ 1.225
PV = $-
Difference between bonus and lump sum amount present value is = $-
So we consider option c for lump sum amount.
14.c
PV = $1
Gift on first birthday and future value on 30th birthday. So we consider 29 years for interest rate charge.
n = 29years
r = 6%
FV=?
FV = PV * (1 +r) ^n
= $1 * (1 + 0.06) ^29
= $1 * 5.42
FV = $5.42
15.b
FV = $35000
n = 5years
R = 9%
PV=?
PV = FV/ (1 + r) ^n
= $35000/ (1 + 0.09) ^5
= S35000/ 1.538
PV = $ 22,747
16.c
PV = $5000
FV = $10000
n = 12 year
R=?
FV = PV * PVIF r, n
$10000 = $5000 * PVIF r, 12 year
10000/5000 = PVIF r, 12 year
2 = PVIF r, 12 year
PVIF table shows.
R = 6% nearest to 5.95%
17.e
PV = $1200
FV = $3000
R= 6%
n =?
FV = PV * PVIF r, n
$3000 = $1200 * PVIF 6%, n
3000/1200 = PVIF 6%, n
2.5 = PVIF 6%, n
PVIF table shows.
n = 15.73
18.d
Sr.FV $yearsInterest ratePV= FV / (1 +r)^n
18017%$-%$-%$466.44
Total PV =$803.23
19.c
Sr.PV $receive in yearsdiff. to future 6yearsrate FV= PV * (1 +r)^n
180157%$-%$-%$700
Total PV =$1205.43
20.c
PV = $23000
R = 0.658% pm = 0.658 *12 = 7.896%
n = 5years
Pmt=?
Pmt = PV * r /[1 – 1/ (1 + r) ^n]
= $23000 * 0.07896 / [1 – 1/(1 + 0.07896) ^5]
= $23000 *0.07896/0.3161
= $23000 * 0.24979
Pmt = $5745 annual
= $5745 / 12months
Pmt = $478 per month
21.c
Pmt = $821.69 pm = 821.69 * 12 = $9860.28
n = 30 years
r= 0.5416% pm = 0.5416% * 12 = 6.4992%
PV=?
PV = Pmt * 1/r * [1 – 1/ (1 + r) ^n]
= $9860.28 * 1/- * [1 – 1/ (1 -)^30]
= $9860.28 * 1/- * [0.8487]
= $9860.28 * 13.05
PV = $-
22.d
r = 10% = 0.10
Pmt = $40000
PV=?
PV = Pmt * 1/r
= $40000 * 1/0.10
PV = $400,000
23.e
PV = $1200
Pmt = $96
R = 8%
n =?
PV = Pmt * PVIFA r,n
$1200 = $96 * PVIFA 8%,n year
12.5 = PVIFA 8%, n year
PVIFA table shows.
Forever
24.b
Pmt = $30
r = 10%
PV=?
PV = Pmt * 1/r * (1 + r)
It is an annuity due, so we follow new formula.
= $30 * 1/0.10 * (1 + 0.10)
= $30 * 11
PV = $330
25.b
Pmt = $1000
n= 30years
r = 10%
FVA=?
FVA = Pmt * FVIFA r,n
= Pmt * 1/r * [(1 +r)^n – 1]
= $1000 * 1/0.10 * [(1 + 0.10)^30 – 1]
= $1000 * 1/0.10 * [16.449]
= $1000 * (164.494)
FVA = $-