Free IMA CMA-Strategic-Financial-Management Practice Exam with Questions & Answers | Set: 2

K Malone is a successful entrepreneur, Currently she is considering investing in a capital protect, which would benefit tourism in North Caroina Because of tourism, the State of North Carolina is willing to lent) her $150,000 at a rate of 5%. well below the market rate Her estimated net cash flows for the 3-year lifetime of the project are S15 000 $89,000 and $60,000 respectively Recommend whether or not Malone should undertake this project.

It there is sufficient capacity to fill the order, which of the following are relevant for a special order decision?

Javier makes hand-looted learner dog collars. The materials cost $10 per collar and the collars are sold for $50 each. Javier sells me collars at a local farmer's market mat charges S100 per month for space rental if Javier's income tax rate is 30%, how many collars must Javier sell each year to earn $1,000 net income?

Sunnyvale Gas Company had a $50 million issue of 30-year mortgage bonds issued at par 10 years ago The coupon rate on the bonds is 15% and Interest is payable semi-annually on March 1 and September 1. The bonds are currently trading at SI 300. The can provision of the issue states that the bonds are callable after the S-year deferral period at 108 plus accrued interest. If Sunnyvale calls the bonds effective June 1 what is the cash payment, ignoring taxes, to the bondholders?

A company is considering a capital project that includes the purchase of a new machine costing $100,000. The machines estimated useful life is five years with no salvage value. The annual operating cash inflows from the project are shown below.

Given an effective income tax rate of 20% and using straight-line depreciation, what would be the projects net cash flow in Year 3?

Sigma industries is considering purchasing Lambda Products in a cash transaction Sigma financial analysts Dave conducted an extensive amount of negotiation and due diligence and nave summarized the following financial information for management.

• Assets having a 10-year remaining life can be acquired for $22 million

• Assets are to De depreciated over their remaining life on a straight-line basis for Doth book and tax purposes

• Current liabilities of Lambda amounting to S3 million must be assumed by Sigma

• Lambda operations are expected to produce annual pre-tax cash Don of S7 million for the remaining 10 years of operation

• A16% return on investment is required by Sigma for acquisitions of this type

• Sigma's marginal Income tax rate is 35%

What is the net present value to Sigma of the Lambda acquisition rounded to the nearest thousand?

Management is responsible for identifying potential events mat could represent opportunities or threats. Which one of the following is not a viable event identification technique?

IF a company does not have a code of conduct, the company most likely

FumiSelf is a global manufacturer of consumer-assembled furniture with a business presence in nearly every country. The Vice President of Production was presented with the following information by the Vice President of Finance as of the end of the current quarter.

Explain me concept of relevant cost in the season-making process and discuss whatever the €200, 000 course development coil is relevant to OLi's price decisions in future years

Essay

Online Learning Inc. lOLI) is a privately-held company based in the IUC that specializes in providing online courses in English as a Second Language (ESL). OLI is trying to set up a new sales office in a foreign country. It needs a business license to operate in that country. The license normally lakes six months to obtain. An official of that country said that he could expedite the process for a fee of €300.

OLI estimates the new sales office can bring €300,000 incremental profit annually OLI has just launched a new online 40-houi course to help adult ESL learners master basic business English. The price of the new course is €500 per student, the variable cost is €300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent €200.000 to develop the new course before launching it. There are many online course providers in the marketplace, and each has its own feature However, OLI's highly qualified staff and good reputation have enabled it to charge a premium price compared to its major competitors. Recent market research indicates that if OLI raises the price of its new business English course by 10V the student enrollment would decrease by 5V A regional airlines company in Asia has approached OLI and offered to enroll 1.000 of its employees in the new course if OLI would agree to a special price of €350 per employee If OLI accepts this offer, an additional €10,000 onetime cost would be required to temporally expand its capacity to accommodate the new students.