FIN3702 ASSIGNMENT 1 SEMESTER 1 2024

FIN3702 Assignment 1 Semester % TRUSTED workings, explanations and solutions. For assistance call or us on . Question 1 Not yet answered Marked out of 1.00 Thyme Bank Ltd has offered Pizza Parlour Ltd the following in response to a R250 000 one-year loan application which was made to the bank. The stated rate was 9% and a 13% compensating balance. What will the effective annual rate be... O 1. 790% O2 375%, © 3. 10.34%. O 4 13.00%. Question 2 Not yet answered Marked out of 1.00 Three important line items on the statement of cash flows that must be obtained from the income statement include all the following EXCEPT ... interest expenses. het profit after taxes. depreciation and any non-cash charges. O4 cash dividends paid on both preference and ordinary shares. Question 3 Not yet answered Marked out of 1.00 The key inputs for preparing pro forma income statements using the simplified approaches are the ... sales forecast for the coming year and the cash budget for the preceding year. cash budget for the coming year and sales forecast for the preceding year. sales forecast for the preceding year and financial statements for the coming year. sales forecast for the coming year and financial statements for the preceding year. Question 4 Not yet answered Marked out of 1.00 A firm's credit policy consists of which of the following items? O1. Credit period, cash discounts, credit standards, receivables monitoring. O02. Credit period, cash discounts, credit standards, collection policy. O 3. Credit period, cash discounts, receivables monitoring, collection policy. © 4 cash discounts, credit standards, receivables monitoring, collection policy. Credit period, receivables monitoring, credit standards, collection policy. Question 5 Not yet answered Marked out of 1.00 Namo Ltd. has a receivables turnover rate of 19.5, a payables turnover of 11.8 and an inventory turnover rate of 18.6. What is the approximate length of the firms operating cycle? (Assume a 365 day-year) O11 45 days. O2 9 days. © 3. ag days. O4 60 days. Question 6 Not yet answered Marked out of 1.00 Momo Investments Ltd borrowed R200 000 for one year under a revolving credit agreement that authorised and guaranteed the firm access to R350 000. The revolving credit agreement had a stated interest rate of 6.5% and charged the firm a 3% commitment fee on the unused portion of the agreement. Based on this information, the effective annual rate on the loan was ... (assume 360 days in a year). O 1. 7.75%, O2 975%. © 3. 910%, O4 g som. Question 7 Not yet answered Marked out of 1.00 Certain financing plans are termed conservative when the ... tisk is increased. O02 working capital is relatively low. working capital is relatively high. short-term financial is frequently used. Question 8 Not yet answered Marked out of 1.00 An increase in the current asset to total asset ratio has the effects of ... on profits and ... on risk. © 1. a decrease; a decrease O 2. an increase; a decrease O 3. a decrease; an increase O 4. an increase; an increase Question 9 Not yet answered Marked out of 1.00 Voslorus Ltd is considering whether to pursue an aggressive or conservative current asset investment policy. The firm's annual sales are expected to total R, its fixed assets turnover ratio equals 4.0, and its debt and ordinary share equity are each 50% of total assets. EBIT is R150 000, the interest rate on the firm's debt is 10%, and the tax fate is 40%. If the company follows an aggressive policy, its total assets turnover will be 2.5. Under a conservative policy its total assets turnover will be 2.2. Question 9 If the firm adopts an aggressive policy, how much lower will its interest expense be than under the conservative policy? O11. pgaig. © 2. Rg 861. © 3. p9397, O4 pogaia. Question 10 Not yet answered Marked out of 1.00 What's the difference in the projected return on equities’ (ROEs) under the aggressive and conservative policies? OV 1.2% O?2 1.5% O38 1.8% OF 9.16% Question 11 Not yet answered Marked out of 1.00 Assume that the company believes that if it adopts an aggressive policy, its sales will fall by 15% and the EBIT by 10%. However, its total assets turnover, debt ratio, interest rate and tax rate will all remain the same. In this situation, what will be the difference between the projected ROEs under the aggressive and conservative policies? O14. 9 24%, O2 9 46%. © 3 970%. O 4 298%, Question 12 Not yet answered Marked out of 1.00 Which of the following is NOT correct for a firm with seasonal sales and customers who all pay promptly at the end of 30 days? The accounts receivables period (ACP) will vary from month to month. The quarterly uncollected balances schedule will be the same in each quarter. The level of accounts receivable will be the constant from month to month. The ratio of account receivable to sales will vary from month to month. Question 13 Not yet answered Marked out of 1.00 Shishuba Ltd has issued a R commercial paper for R992 000 for 60 days. Based on this information and assuming a 365-day year, the effective annual rate of interest on the commercial paper would be ... O11. s00%. O2 565%. © 3. 620%. OF 761%, Question 14 Not yet answered Marked out of 1.00 The economic order quantity will rise due to an increase in which of the following variables? O1. Product demand (sales). 02. Carrying costs. 0 3. Ordering costs. O4 Both 1 and 2. O5. Both 1 and 3. Question 15 Not yet answered Marked out of 1.00 Firms generally choose to finance temporary current operating assets with short-term debt because ... short-term interest rates have traditionally been more stable that long-term interest rates. a firm that borrows heavily on long-term basis is more apt to be unable to repay that debt than a firm that borrows short-term. short-term debt has a higher cost than equity capital. matching the maturities of assets and liabilities reduces risk under some circumstances and short-term debt is often less expensive than long-term capital. Question 16 Not yet answered Marked out of 1.00 In the ABC system of inventory management, the ... method or system could be utilized to control C items. 01. red-line O02 just-in-time © 3. basic economic order quantity (EOQ) O4 materials requirement planning (MRP) Question 17 Not yet answered Marked out of 1.00 Skhumbuzo Steel Works, Ltd. is required to carry a minimum of 40 days’ raw steel, which is 250 tons. It takes 15 days between order and delivery. At what level of steel would the company reorder? 01. 344 tons. O2 667 tons. O 8. 600 tons. © 4. 3750 tons. Question 18 Not yet answered Marked out of 1.00 Khensani Ltd needs to raise more capital. The company purchases supplies on terms of 1/10 net 20, and it currently takes the discount. The one way of getting the much-needed funds would be to forgo this discount. The owner believes she could delay payment to 40 days without any adverse effects. What is the effective annual percentage cost of funds raised by this action? (Assume a 365-day year) © 1. 19.50% O2 11.74% © 3. 12.36% O4 13.01% Question 19 Not yet answered Marked out of 1.00 The lockbox plan is ... O 1. used to identify inventory safety stocks. O2 used to slow down the collection of checks firms write. © 3. used to speed up the collection of checks received. 0 4. used to protect cash, that is, to keep it from being stolen. Question 20 Not yet answered Marked out of 1.00 Short-term loans that businesses obtain from banks and through commercial Paper are ... OA. negotiated and secured. spontaneous and secured. negotiated and unsecured. spontaneous and unsecured.