midc - Midterm Examination, BUS312 NAME: _ Instructions:...

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Midterm Examination, BUS312 NAME : ____________________________________________ Instructions: For qualitative questions, point form is not an acceptable answer. There are a total of 90 marks on this examination. This examination is composed of six questions and seven pages. Please answer all questions on the examination. 1. (10 marks) Comment on the following assertion. “Firms should not use debt to finance their business activity because it imposes additional risk on shareholders.” 2. (10 marks) You work for ABC company. Your boss never graduated from high-school. Nonetheless, she has heard about net present value (NPV) and wants you to explain it to her. What does it measure? What are its fundamental components? What factors make net present value difficult to implement in practice? 3. (10 marks) Comment on the following assertion. “If a firm can reduce its trade capital usage, then it should definitely do so.” 4. (10 marks) Consider a deferred perpetuity of $100 per quarter with the first and upcoming
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midc - Midterm Examination, BUS312 NAME: _ Instructions:...

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