FINA 3313 Final Exam Questions with Correct Answers Latest Update 2025/2026

FINA 3313 Final Exam Questions with Correct Answers Latest Update 2025/2026 American Products is concerned about managing cash efficiently. On the average, inventories have an age of 86 days, and accounts receivable are collected in 56 days. Accounts payable are paid approximately 33 days after they arise. The firm has annual sales of about $32 million. COGS are $18 million and purchases are $14 million. The cash conversion cyle is _____________ days. - Answers 109 OC = AAI + ACP =86 +56 = 142 AAI= Average age of inventory = (INV/COGS) X 365 ACP = Average collection period = (AR/REV) X 365 CCC = OC - APP = 142 - 33 = 109 APP = Average payment period = AP/COGS X 365 American Products is concerned about managing cash efficiently. On the average, inventories have an age of 86 days, and accounts receivable are collected in 56 days. Accounts payable are paid approximately 33 days after they arise. The firm has annual sales of about $32 million. COGS are $18 million and purchases are $14 million. USE Purchases formula The amount of resources need to support the firm's cash conversion cycle is $_______________. (no $ sign in answer) - Answers 7,884,932 OC = AAI + ACP =86 +56 = 142 AAI= Average age of inventory = (INV/COGS) X 365 ACP = Average collection period = (AR/REV) X 365 CCC = OC - APP = 142 - 56 = 109 APP = Average payment period = AP/COGS X 365 Inventory = COGS X (AAI/365) = $18,000,000 X (86/365) = $4,241,096 Accounts Receivable = REV X (ACP/365) = $32,000,000 X (56/365) = $4,909,589 Accounts Payable = PURCHASES X (APP/365) = $14,000,000 X (33/365) = $1,265,753 Resources Invested = NWC = INV + AR - AP = $4,241,096 + $4,909,589 - $1,265,753 Mav, Inc. wants to borrow $10,000 @ 10% APR for 1 year. If this is a fixed rate loan and the interest is paid at maturity what is the effective annual rate for this loan? (in percent terms but without % sign) - Answers 10 Mav, Inc. wants to borrow $10,000 @ 10% APR for 1 year. If this is a fixed rate discount loan what is the effective annual rate? (in percent terms but without % sign) - Answers 11.1 Effective Annual Intertest Rate for a discount loan is Interest/(Amount borrowed - Interest) = $1000/($10,000-$1,000) Mr. John Hall (UTA's VP of facilities) notes that the solar cells on top of the parking garages were funded by a grant that required the university to pay for 20% of the solar cells (total cost of the solar cells was 2.25 million USD). The solar cells save about $72,000 per year in electricity costs and have an expected life of 30 years. Ignoring inflation, what is the IRR of the project from UTA's perspective? - Answers 15.8% The credit terms for 2 suppliers are as follows; Xpress Widgets, Inc. 1/10 net 60 Rapid Rabbits Comglomerated 2/10 net 90 What is the approximate cost of giving up the discount offered by Xpress Widgets? - Answers 7.3 The credit terms for 2 suppliers are as follows; Xpress Widgets, Inc. 1/10 net 60 Rapid Rabbits Comglomerated 2/10 net 90 What is the EFFECTIVE ANNUAL cost of giving up the discount offered by Xpress Widgets? - Answers 7.53 The credit terms for 2 suppliers are as follows; Xpress Widgets, Inc. 1/10 net 60 Rapid Rabbits Comglomerated 2/10 net 90 What is the approximate cost of giving up the discount offered by Rapid Rabbits? - Answers 9.13 The credit terms for 2 suppliers are as follows; Xpress Widgets, Inc. 1/10 net 60 Rapid Rabbits Comglomerated 2/10 net 90 Assume your firm is unable to take advantage of the discounts and its bank offers short term financing @ 10% APR. Should you borrow to take advantage of the discounts offered by Xpress, Rapid, both, or neither? - Answers Neither Carl's Jr. is considering paying employees every 2 weeks instead of weekly. Carl's has 2,300 employees who work 30 hours per week at an average wage of $10.25. If the firm's cost of capital is 9%, how much will the change save the firm annually? (no $ sign, round to nearest whole number) - Answers 63,652 2,300 X 30 X 10.25 X 0.09 ILUVFINANCE, Inc. has two offers for short term financing. The first is a discount loan @ 9% and the other calls for 10% to be paid at maturity. Both are offering $75,000 for 1 year. What is the EFFECTIVE annual rate for the lowest cost loan? (% terms w/o % sign). - Answers 9.89 A sophisticated capital budgeting technique; found by subtracting a project's initia