{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Midw2005_soln

# Midw2005_soln - ANSWERS to Mid-Term for Finance 1 Winter...

This preview shows pages 1–2. Sign up to view the full content.

ANSWERS to Mid-Term for Finance 1 Winter 2005 Multiple Choice: 2 marks each Version A 1.A 2.B 3.B 4.C 5.D 6.D 7.B 8.A 9.C 10.B Version B 1.D 2.D 3.C 4.B 5.B 6.A 7.A 8.B 9.B 10.C Multiple Choice: 8 marks each - calculations must be shown Question 11 - answer A: \$1.15+ \$1.32+\$1.28+\$45.33; FIND PV OF EACH = \$35.25 Question 12 - answer C 100,000 BONDS NEEDED AT PAR. YTM OF \$1196.36 = 8% THUS COUPON = 8% Question 13 - answer D EPS 0 = \$6.50; EPS 1 = \$6.825 THUS DPR = 60% AND RR = 40% Question 14 - answer C (17.24 - 17.60 + 10.79) X 8% = 83.478 OR CLOSE TO \$800,000 Question 15 - answer E 4.47 & 6 YEARS Question 16 - answer C -\$100(PVA 6%, 3) + [\$200(PV 8%, 1) + \$300(PVA 8%, 4)(PV 8%,1)] (PV 6%,3) = \$660.67 Question 17 - answer A \$5,954 IN TAXES PAYABLE UCC: Beginning of 2003 \$132,000 (117,000 + 15,000) 1/2 purchase 66,000 Balance 66,000 CCA (@15%) (9,900) Other 1/2 66,000 UCC beginning 2004 122,100 Sale (lesser of) (88,000) (132,000 / 3 = 44,000; x 2 = 88,000) Balance 34,100 CCA @ 15% 5,115 Tax Effects: CCA in 2004 5,115 x 0.4 = \$2,046 save Capital Gain in 2004 (\$64,000 - 44,000)(0.50)(0.40)(2) = \$8,000 tax cost TOTAL \$5,954 tax cost

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Question 18 Crossover rate: \$170 = \$70(PVA ?%, 3) ? = 11.36% To graph: Discount Rate % (x axis) NPV \$ (y axis)
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 2

Midw2005_soln - ANSWERS to Mid-Term for Finance 1 Winter...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online