midN - Midterm Examination, BUS312 Evening, Fall 2008 NAME:...

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Midterm Examination, BUS312 Evening, Fall 2008 NAME : ________________________________________Student #________________ Instructions: For qualitative questions, point form is not an acceptable answer. For quantitative questions, an indication of how you arrived at particular numbers is required for the purpose of assigning part marks. There are a total of 60 marks on this examination. This examination is composed of 6 questions and 6 pages. Answer all questions on the examination. No other papers will be marked. The examination period is one hour and fifty minutes . If you use pencil, your midterm will not be returned. No washroom breaks during the exam period. 1. (10 marks) The following information is available on the financial accounts of ABC Corporation. 2008 EBITDA ? Depreciation 400 Interest ? 2008 Trade Capital ? Short-term Debt 900 Net Fixed Assets ? Equity ? Invested Capital ? NOTES: “Equity” is the sum of all of the accounting equity accounts (e.g., share-capital plus retained earnings). You can presume that depreciation for tax and for financial statement purposes is the same, and therefore, there is no deferred income tax in this problem (i.e., capital cost allowance is the same as financial statement depreciation). ABC neither borrowed incrementally nor repaid short-term debt during 2008, and therefore, its interest expense for 2008 is the opening balance for 2008 (same as the closing balance) times the interest rate on its short-term debt, which is 10% per annum. ABC’s tax rate is 40%. ABC’s rate of return on invested capital for 2008, after tax and after depreciation, using end of period invested
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midN - Midterm Examination, BUS312 Evening, Fall 2008 NAME:...

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