Fr. Excel Professional Services, Inc. Management Firm of Professional Review and ining Center (PRTC) (LUZON) Manila be pe seat Se Te * Banaras iy cae (uasatAShGaclad iy (oss) sacozas Cons CRY O85) RNS he, 218 nee 9 (MINDANAO) Cagayan De Oro City (0995) 0570499 * Davao City (082) 2250049 saad MANAGEMENT ADVISORY SERVICES (U/BT ee CPAREVIEW ah oxo E tak pease resect on 5759, HO Products, The needs to purchase these units to continue feling prec oF SAE: The second asa unk varie cece oS Ber Unt, and toes Be UM, td tocatd mee coe a gs ot PS 2. Black Co.'s breakeven point Was 780,000, varia SaRaNERS averanes 60% oF sales, anc te mete 38S, and the margin of safety was P15 ‘contribution margin pee ee Mace 2. P 364,000 ° 8. P 548,000 &. br sb0.0 3. Madden Company nas projected its income taxes for next Year as shown below re out Subject to a 40% income tox ae le (260,000 unto Sates (280000 ta) 8,000,000 Varibie costs 2,000,000, noe costs .o00‘000 “Total costs 5.000.000 Income before taxes 5.000.000 Madden's net assets are 936,000,000. The peso eles that must be achieved for Madden to cares 20% after tax return on assets would be 2. P8,800,000 «. P46,000,000 . P12,000,000 4. 76,880,000 4. Metalcraft produces three inexpensive socket Wrench sets that are popular with do-t-yourselves ‘Budgeted information for the upcoming years 05 ‘follows. Estimated Model Selling —Vanabie Brice Cost No.19 P40 P 550 30,000 sets No. 45 158.00 ——_75,000 sets No. 53 20 P1400 45,000 sets Total fixed costs for the socket wrench product line 's P961,000. "If the company’s actual experience remains consistent with the estimated sales volume Percentage distribution, and the firm desires to Generate total operating income of 161,200, how many Model No, 153 socket sets will MetalCraft have to sell? 2. 54,300 c. 26,000 b. 155,000 d. 181,000 5. Gardener Company currently is using its full capacity of 25,000 machine hours to manufacture product XR-2000. JE} Corporation placed an order with Gardener for the manufacture of 1,000 units of KT- 6500. JE) would normally manufacture this component. However, due to a fire at its plant, JE) - Signay Corporation is manufacturing other products. This is 9 one- time | Sspeaal order. The following reflects unit cost data, {and seling prices. ixcss00 — xg.2000 Material 727 P24 Direct labor 2 10 Variable overhead 6 5 Fixed overneas “6 o Variable s & A 5 4 Fea 8A 2 Fa Normal seling price Piz5 pus Machine hours requires 3 4 What is the minimum unit price thet Gardener should charge JE) to manufacture 1,000 unis of eT 500? 2. P33.09 «110.00 . P96.50 4. 125.00 Rotak co. is a manufacturer of industrial Components. One of thelr pracucts that Is Used a6 2 sub-component in auto manufacturing is KB-96. This Product has the following financial structure per nv Selling rice aso Direct matenals 720 Direct bor 15 Vanabie overneae 2 Fixes overnead 0 Shipping & handling 3 Fixed sling & san =10 Total costs 220 Rotak Co, nas received a one-time specs! order for Assume tia Ratak open Bt ful capacty and the next bes Starnes ter eapacty’ on existing equipment a toees hee wnoule "reduce" conenbuton af piace’ Se minimum price tat ig acceptable, using the orgie ‘ita, forts onetime special order eh oxen o beo ees 2 bay 8. Pico 2 table _manvtacturing company that has the following cost structure 1 Producing table tops Unit Costs Direct materais P23 Direct labor 2 Variable OH 19 Fixed On 7 Variable aamin. Cost 2 Fixed admin. Cost <3 Total unt costs Pez Recently, Bignay Corporation received an offer fror Dunat Corporation to supply the table tops t Bignay. Bignay is considering buying the table to} from Dunat instead of manufacturing the Internally. Assume tat Bignay Corporation ¥ Operating at full capacity. IF Bignay had i adcitional capacity, they could manufacture che nich have costs per unit as: www. Page 1 of 8 rtc.com.ph MAS.PREWEXCEL PROFESSIONAL SERVICES, INC, Pex Unit Seting price 2100.00 Direct materials 38.00 Direct labor 22.00 Variable OH 49.50 Foxes OF 475 Variable admin. Cost 250 Flxed admin. Cost zs Operating margin 10.00 Ung the above data, reconsider the offer that Blan recenee tram bu Catnriy Seeey tnt {Be abe tops instead of elf manutaruling thay tern What isthe maximum pric from Ounat that Bignay would be witing to accept? 2. P68.00 67.09 B. 60.00 J. P65.00 Bigstan Nes. 8 through 20 are bases on the following The following pertains to Jasmin Corporation Partial Balance Sheet December 33, 20:8, Liabilities ana stoexnolcers" Equity Current iabiities P 60,000, Long-term liatiities 30,000, ‘oders" equity 150,009 Total liabilities ana stockholders: Paoa.0c9 equity Jasmin Corporetion Income Statement For the Year Ended December 31, 2018 Net sales than the corporate HOF vetove th onstred aaa 6. ba neared because st produces. 6:2 Isnt ina rine thn cy bce © unos AOL and reeouel postive numbere in operations and 12, Vented, nc, made soma chonges in 09 rowded the following formation provided tn oR 900,000 Operating revenues Operating expense: 239.500 Operating asser 200 What parcontage represents Investment for year 37 4. 26.57% ‘ b. 25.00% 4 19-4 ammonal manager receives 9 bons 20% of the rasidual Income froth Tesults of the division include 1,000,000, divisional xpenian, Bebo (000,000, and tha rexuned cat aivisional assets, 2,000, a Of return is 38%, "What sinount reprenants. the manager's bonus? ; 200,000 © 100,000 b. P140,000 4. pa0,009 ems 14 and 15 are based on the following int The bass year 2019. Larnings not Interest eape Preferred stock dividend Common stack dividend payout rat c 80,000 Common shares outst andy ost of goods sold 45.009 EMtective corporate tins box sate ‘ Gross margin 35.000 Operating expenses t3.009 Peeled common stock sven per share t Income before income taxés P2000 18 Corporation or ote & Income taxes 5.000 M4 ©. 'P3.90 Netincome Bis.000 72.99 6 bat isu. Sod Sete, ies 6900 shares of cmon sock 15,11 bavaon Corporation's common stock Is expecten Common a SANG. The market pce ot hasan 1S th rear yal 8 PHiezaarninge rote @tteten bald aurdangs Gr stsgee, gt, 2008, as Pa, jamin, 8 BNE ber share (othe nearest pean, te RBI dlvidends oF P2.00'per share during sin be BB Sgt to ecu ratio tor this corporation? p15 © p72 2.0.4 umes < LO times b. Pse oboe 5 06 times 4. 25 times 26.02 Telecom is considering a projet fy a ‘9 Ferm i gtt® Phee/earnings (P/E) ratio tor thy tne cH a cost P50 mitnon Qe ne Coming corporation? Man QlQntng, combination dade aha £9 8 2.8.20 times © 7.20 times finance tha nvestmnan b/ 10.70 mes 4. 9.20 times * TUE PLS tion of 20-year bonds ot « rice og i Hocsuet COUPON ate of gto Me oF 4} 10. What is the dividends yiela ofthis ‘corporation? Notation cowts of 2 percent ot dat 2.870% ©. 9.900 * Ghe P35 mon Pot tunde Cenereted thom B. 660%, 3. 495% aaroinge, 14. Sunrise Corporation on investment of SAMY Markel Is expected to earn 19 >, ROT” uni avon, wien current pecan ot muy wont ara nae Yielding pate ‘ “ ss beta cootficient for OQ w estimated tot Coneriaun wit Subject t0'an effective corporate it (1) reduce a Breduce P120,000 atv et 4gUis,'® enc fan Fs BOM TH Cop Aare Pncing. eae {saan o uence, {ha expected return on a becunty Sy adoiny Peau Because reduces divisonai {ha expecta faturn to the ere SsDected market return, winch ndjuy companys beta Compute’ rare wouw.prtecom.oh MAS.PREWEEK© fous 4. Pa3.b6 considering ether teasing oF Gear ease, ‘The burcnsee 1000. "The Treaser nas 8 @-yoer ive once ime it Is expectea to have a resate vole er 0. The Burger soint “uses atone SepFeciation, borrows money at 7:5 percent Ses tee SuMiclent tax ioss carryovers to offeat any’ poten {arable income tne firm might have over he rene 2 019. Te Auto Mart is trying to decide whether to lease or 2 uy ‘some new ‘euoment the aula ees Pek.co, nen S-year ie, and wit bo werness ther the 3 years, the aferan alecount rae’ Ss Bercent, The annal deprecation ta cheid 653 and the aftertax annual lease payment 1s 26,033. 026. What \s the net cash flow What is the net advantage to leasing? 2. =P3,508 ce Payana 8 cpaiz a. P7453 D 20. knight Motors is considering either leasing or buying some new equipment. The lease payments would be () 27. What is the net cash flow for the tenth yeer of the 14,500 a year for 3 years. The purchase price is, 52000. ‘The equipment has a 3-year life and then Is expected to have 2 resale value of P12,000. Knight Motors uses straight-line | depreciation, orrows money at 9 percent, and has a 35 percent tax rate. What is the net advantage to leasing? a. -P2,742, c. P3529, b. -p2i2a2 P3898 ©21. Crossing Corporation recently sold 3 used machine for P40,000. The machine had a book value of 60,000 at the time of the sale. What is the after tax cash flow from the sale, assuming the company's ‘marginal tax rate Is 20 percent? a. P40,000 c. Pa4,000 b. P60,000 d. P32,000 percent. Percent as its discount rate. amount of the cash flow in year 4? a. Pi5,181 c. P9868 b. P23,356 d. P43,375 following projects (on January 1, 2016: Jan. 1, 2016, Dec. 31, 2020, Cash outflow. Cash inflow IRR P-A 3,500,000 —_P7,400,000. 15% P-B P4,000,000 9,950,000 ? age 3 of 8 (etnies ot €22. Uaing tne nat present vive method, Project hs oat Wine spe (rete, markt C24, Project's interna rate of return ie anasto oG2 few machine. The machine san’ ce purchase Blane and P3.005" witha salling price of PSOO and cominnes wan labor’ costs of F480 par unit. The Bureas atten Revenue permits machines Yyoerg, wnat ts tho net savertage to leasing? Revenue permits machines of | mis. type tee 2. “2,008 eBa407 with no estimated “salvage value." Gienaste Wan" B “prige0 a. B95 196 value Glenmore Neos 1822. Kent Corporation faces @ marginal tax rate of 35 One project that is currently under evaluation has @ cash flow in the fourth year of its life that has a present value of P10,000 (after-tax) Kent Corporation assumes that all cash flows occur at the end of the year and the company uses 11. What Is the pre-tax Items 23 and 24 are based on the following information: A firm, with an 18% cost of capital, Is considering the www. prte.com.ph mtd sans te ‘Whats the net cash oulfiow at te beginning of the first year that Glenmore Corporation souls te S's ‘apital budgeting enelysise 3." P(@3,000) © 236,000) B. P(30;000) 4 C105 000) for the third year that Gtenmore. Corporation. should “use in. % captal Dudgeting analysis? 3. P8400 BL P6420 é 53,700 Pa7,400, Project that Glenmore Corporation shoud use ies capital budgeting analysis? 3. P81,000 c. 963,000 = B. P68,400 6. P50,000 Hems 28 thru 30 are based on the following Information: Capital Invest Inc. uses a 12% hurdle rate for all capital ‘expenditures and has done the following analysis tor four projects for the upcoming year Initial Cash Outlay ( Project 1 Project 2 Projex3 Project 4 200,000 298,000 248,000 P272,000 Annual net cash inflows ri P65,000 P100,000 80,000 P 95,000 Ye2 70,000 135,000 95,000 125,000 Yr3 80,000 80,000 90,000 30,000 Yr4 40,000 65,000 80,000 60,000 NPV (3,798) 4.276 14.064 14.652 PL 98% 101% 106% 105%. IRR 11% 13% 14% = 15% (C28. Which project(s) should Capital Invest Inc. undertake during the upcoming year assuming it has no budget restrictions? a. All of the projects. b. Projects 1, 2, and 3, ¢. Projects 2, 3, and 4, 4. Projects 1, 3, and 4, ) 29.Which project(s) should Capital Invest inc. undertake during the upcoming year if it has only 600,000 of funds available? a. Projects tand3. ——_c, Projects 2 and 3. b. Projects 2,3, and 4. d, Projects 3 and 4. MAS. PREWEEKSenta G SERVICES, INC. Dro. wnich project(s) ould capi Sderake daring ta uptomisg ee eM, Bo. 300,000 of capital funds availapies* N8S only @. Project 1, ed Projet, 3, ana 4. © prec 3 ona d. Project 3. a1. ™e omant company pans to invest ina dupteaing machine that costs P120,000. The following ave Sxpected. annual cash Inflows thet. ere “Caey feesived each month and the estimated. ssivayl Value at any point. of each year Year Cash inflows vs + 'P40,000 50,000 2 36,000 40,000 3 32,000 28,000 4 28,000 20,000 5 25,000 5,000 What Is the bail-out period for this project? 2. 2.50 years 257 years b. 2.43 years 4d. 1.83 years Items 32 and 33 are based on the following information: Ethan, Inc. has seasonal demand for its products and management is considering whether level production or ‘seasonal production should be implemented. The firms’ short term interest cost is 8%, and management has developed the following information to make the decision: Alternative 2 Level ‘Seasonal roduction production Average inventory 2,000,000 1,500,000 Production costs P6,000,000 6,050,000 9.32. Which alternative should be acceoted and how much Is saves over the other alternative? sr oe the thy woul sa ever the Would £2¥e £24,000 In collection expenses esate 2 Astume the fon and itera re not 884 On the foi 4 ling nforrnin ating 95 0 coreg Sye208N nts Sesena! wholesale customers to make’ pursmmuy wai, amin Sauling payment unt the retalselnng vest Sales occur as follows: ‘selling season Date ofsale quant September: gun Sciober 100 uns November dum December: so uma Senuary So-unts Each unit has 2 selling price of fen yo 8 price of P10 regards of the The terms of sale are 2/10 net 20, tanuary 3 cat All sales are on create eaters Al eustomers ake the discount and abide bythe terms or the ascount poicy. oe All customers ake advantage of the new seasonal dating poy. gue ‘The ‘peak. seling season for ai customers is. mide November to late December. 836. For the seling firm, whicn of the following 's not an expected advantage to initiating seasonal cating? 2. Reduced storage costs. D. Reguced creit costs ©. Attractive credit terms for customers 4. Reduced uncertainty about sales volume. ea For sales after the inttation of e seasonal cating o: Aeamaoe to eaeece ryt ae ees ee cere ©. Alternative 2 with P10,000 in savings. pais ae 76,860 t & Arena Fun e100 neavings 2 g R588 5 029 tent ve amas? 0. nina open os meee traf a. 6% G ee 500 per month occurs, and the individual spends to 7300 ot rats marge! propeety fe Save 34. Newman Products has received proposals from 9.) é C34 Noman rogues spasm sroccoax system to speed OE 98 ‘ Svar] banks 10 eign receives an averoge of 700 : checks per day averaging P1.800 each, and its COS fag Tomas Corporation produces skincare products for“ Is 7% per year. Assuming that ‘produce equivalent processing 560-day year, which one of the Newman? fof short-term funds results and using & following proposals is optimal for ‘a. A PO.SO fee per check. B.A fat fee of P125,000 per year. €._ A fee of 0.03% of the amount collected. 6. A compensating balance of P1.750.000. the Frame Supply Company has just acquired 3 Tange account. and needs 0 increase its working waittal by 100,000. The company controler nas ‘of funds which s given below pany’s receivables, which ih and have an average factor will advance men and women, An incredibly smooth moisturiang Cream has come onto the market that the company ‘S anxious to. produce and sell. Enough capacity ‘exists in the company’s plant to produce 40,000 nits of the cream each month. Vanable costs to manufacture and sell one unit would be P3.50, and fixed costs associated with the cream would total 340,000 per month. The company’s Marketing Depertment predicts that demand for the new cream wil exzees the 40,000 units that the company is ble to produce. Additional manufacturing space can Be rented from another company at 0 fixed cost of 14.000 per month, Variable costs in the rented faciity would total P4.00 per unt, due to somennat fess efncent operations than in the main plant, The ew cream wil sell for P42.00 per unit. ‘The monthly break-even point forthe new cream units is: MAS. PREWEEK Tas REM |EL PROPESSIONAL SERVICES O40 ranganven Oat Junatine. Company is cannderng « TPR $1 SrouRS reject val equiva ey tance Tee Pattee a,go0, co "sushi 842.4 learning curve of BO assumes that dee SoNE"re: reduced. by 30% for each, doubling, o Qutput What te incremental cont of ke LE 4 Srogucee ay_an approximate percentage of the Chit reduced? PAN unis within & atch ave Considered to have the average complet hatoaten aim ° ary Ste . BL 386 a, 64% ‘Question No, 43 and 44 are based on the following wnat is the expected net present vaive to project? {\s0.motatie Company is considering four indepencen 83,000 (108,200) (152,200) ® (442,000) Sropayiine Project Investment ‘NPY. he oa 1 a0 ae oo P $00,000 FP 40,004 th 3er = 600 Se u P 900,000 P120,00¢ 7 tbat om Ww 1,600,000 — P150,000 E 6, using the micpoint of each range as the best truiate for that range, whet ls the best estimate of the expected sales of the new product? 2 “ase 800 3. 380 @. 800 45.Glare Company's net accounts receivable were 500,000 at December 31, 2019 and P600,000 at December 31, 2020, Net cash sales for 2020 were P200,000, ‘The accounts receivable turnover for Projects 1, Li, and 111 only b. Projects [, KY'ana Lv only Projects fl, {tl, and IV only ©. Projects Ill and Iv only 1051. West Company has a subunit that reported the following data for 2015. Investment turnover 15x Sales, 750,000 Return on sales, 8% ‘The imputed interest rate \s 12% What is the 2020 was 5.0. What were Glare’s total net sales for divisions residual income for 20197 20207 a. 60,000 €. P20,000 2,950,000 ¢. P3,200,000 'b, P30,000 a. PO b. P3,000,000 d.P5,500,000 Ose, 8.46, During 2020 Rock Company purchased P960,000 of Inventory. The cost of goods sold for the year was. 900,000, and the ending inventory at December 31 was P180,000. What was the Inventory turnover for the year? a 64 7.2 bd. 6.0 4, 5.0 Question No. 47 and 48 are based on the following Information, Silver Company needs to pay a supplier's invoice of 60,000 and wants to take @ cash discount of 2/10, net. 40. The firm can borrow the money for 30 days at 11% Der annum plus a 9 percent compensating balance. Page 5 of 8 www. prte.com.ph Grand Company prepared the following preliminary forecast concerning product X for 2020 assuming no expenditure for advertising. Selling price per unit P10 Unit sales 100,000 Variable cost 600,000 Fixed costs 300,000 Based on a market study In November 2019, Grand estimated that it could increase the unit selling price by 15% and incraase the unit sales volume by 10% Mf P100,000 were spent on advertising. Assuming that Grand incorporated these changes in its 2020 forecast, what should be the operating income from product x? @. P175,000 ¢, P205,000 b, P190,000 4. P365,000 MAS.PREWEEmn'2020 as in SOM e8raLing income Farge 1388 33 § "P840,000 800 Pess,o0e 4.116% Company ug con ergo Sung S029 ot 40 Srrheoa Cone meted x8 Puy, 40,000 bavipoine gpa unt Ith. ving pl 28aitional une ‘one E edaition Special ng aeaRRI*s OF 400.000 vaipoint ‘manutactoring Ber unit, and fixed A Soe ach Was received to Os. ‘al “cost of ‘pS ton 9 were accepteas 2. P280. 000, P240,00 Bs. Increase & 760,000 increase O decrease G, PiS0; 009 Nerease, Company currentiy opera which had a uies foe" A company obtainin credit wil! pays everything else be ‘The ascount pe 8 Naher bercertage’ Which toot woule: most the ‘best. course “or uncertainty? 2% Cost-volume-profit analysis B. Expected vaive (aus Wely be used to 3: ‘action “under Seekeam evaluation ona review technique pene the yeas ons. Seattergenrnvation ana ae PPSTELING resus for the yaadsions December 31/2019" a5 ans, N7- tn stustons nen management muse 0 ym Nort ‘ere ete FEECING cnestimeconiy ee EEE ae 600,000 p300o0 where tase ssh se pee, arable costs 310/909, 2° auowtng is nok relevame es Pay wmeN ene Sontribution 2s0;000 ToeSe8 B Beseoton cass VE tae Bion ‘agin Direct costs . Incremental Sepmarecots gasagg "alan oo Segment margin 180,000 30900 Oe. in a weParison of 2019 with, 2018, Boho: Allocated costs £0,000 “a5'999 SoRENY'S "Inventory areave” Fatio increases Net peat Panbog eg aee wore coy gTMOUR salen and in SCS amounts “6 Stetemenngt2lY unehanges, “Wnige eee following pe ios dhe South alvision also sustained an erasing Satemans ecierne ae, imereased ~ inventory ss during 2018, Wimbly's too Management is turnover ratio? cn that the ne limination of thi aiveiogemert st Gost of goods sold decreaseg 1 Pie each division fed coats couie be Aum e. gunts receivable Wimoverincreasea ciiminaee ated. I the South diver soy cee G. QB esse turnover increseee Would ae, _AUALY %, 2009, ‘Wimayereeeee Sioes Prott percentage decieaseg would have oer? 69. An advantage of tn 2 15,000 higher. 45,000 lower D. P30,000 higher loner . P60,000 higher THEORY 41. The amount of inventory that a company would tend to hold in stock would increase as th 2. Cost of carrying inventory decreases, b. Variability of sales decreases § Cost of running out of stock decreases, 4. Length of time that goods arc’'in transit decreases. 2. An appropriate technique for Planning and mraegclling manufacturing inventories, such as one «= Materials, components, and subassemblies, whose «demand depends on the | level of production is, Moterials requirements planning. Fe the internal rate of rate that Cash inflows with the outflows. YS88 discounted cash flows whereas the internal rate of return model does not. equates the discounted 10. In evaluating a cay pital budget project, the use of th: et present value Model is generally not affected b Method of funding the project. b, Initial cost of the project. wwi MAS.PREWEESdas ae Te er et © oi see 9x Cate a ernest tastes Beets a ma Seiee" Peet rau at 5 Een a gcen a 5 Seal aatone! eva .eetas” ‘ota. nianagers shat auipate oreais“Srucade ome Mopagerforred 10 a5 NewS ok cc. isk seeking aspen mrenee -. ‘ad: coment ana ; vc opjective of cas creamy gas ie : on Cer a4 of perfogivision maximize 2 ee sega tnt om Reeders os = ow sarees cmere ree © Bios vanes momen, Sad stent Ss aoe ~h anys wo erage cot var sadvantag® 7 . a ore nan ‘the compeny’s “weighted average 2a. wnat 6 ane gas 43 0 oe, Sinan rere! rn. Whestment (ROL) rather eh Ce FE crete eae » Eetceggrammeracnws tee Eis ae SS Seater tan cura. managers’, percentage, while £ a. Sater Bre pecs neat oe oe Rol Hay tae to resectng Bositive cash f1OW5. Cana arrmwesore conaity cunment meas 2 ROL does oe OW ani el 2 an lowes ee am mveszment aernatve, Rh does oot Chea Investor Is Satee ‘Rsk seaking: 4, BOE SbaE nat reflect all economic Bee pane raz. tne benefits of debt tinancing over SOUCY ve ‘O18. mvestrent managers devel penises oS, hu Benya be Maes eanies oe rnvestment anager cestaat ana meredy eaves Sh aaa eeetak. Noe and tneeby Neigh margins tax rates ang eur NOTIN vera sk: 3 porte, sks, that cant Be benemts eae « developmen ough a portal are called: o. Bmrmaioal tax rates an few rons rest 12% temarnet sks. nef BUeoyotematie rks. crefiesrginal tax rates ané many noninterest 2 Fimespeciic risks tax benefts & Systemetic risks. a. Dhrmarginal tax rates and many noninterest tex benents 17. wnien one of the following factors might, conse wren one of, he flowing cnancil suture? 023. The ootimal captatzation for an organization wSusiy firm eo increase in the corporate income tax rate. can be determined by the: 3: “increased economic uncertainty. o. Maximum degree of financial leverage (OFL) 2b Aninerease in the price/earnings ratio. ‘b. Maximum degree of total leverage (OTL). § Agecrease in the times interest earned ratio. @. Lowest total weighted-average cost of capital qwace), (a0. gyvan Corporation nas the following capital, Intersection of the marginal cost of capital and structure: the marginal efficiency of tn Soe nore rioongo : iclency of investment. ‘equity 1,000,000 24. Which of the following formulas should be used Common equity 39,000,000 Saleulate the aconomnic rave of return ot ena st \t The financial leverage of Sylvan Corp. would (Dividends + ct Wwided : ange in pri re Ineraase 259 result of: Ceatnning price. print Se MN Tssuing common stock and using the proceeds to b. (Net income - preferred dividend) divided by \" m preferred stock common shares 0 o. Tung common sock and using the proceeds to franwat peice per snare clviged c. Fnstcg fue vesmens a eee 7 itn Seca cg mimrrea's wm 6. Bent a war ten by mere eno Page 7 of 8 MAS. PREWEEK(8-25. wnien of tne roiwing factors, | ee Sfaranoise ime foreae, iin rer 2 ort ace, re goa staal nr ee sears mar mca we © alee et ama ofc” Fpl etal tee See ee ee etre manne Bin companies a0 mee tle ee esy 4g, Excimer very NON TY Sean ey inane oes reese a poses SF en baes he Matanes cae yen 2 eae eave ne protuc Pertasenconase Sten soc sre ee pe of tte =o BRR bb. Arise in average NOUseNON comme. plementary aeons A neat " commas he population ; “me composition of th re comets seatemant depend mort Nee raises wneerest rates 828. iit mast WKely central bank of 2 country, firm's irae working capital policies. 2: financing and dividend policies: fhe. the, 1 park of 8 rane Be EeSired revel of liquidity: 3 sherpa OUT vate forking capital polices: sharpltegase in relative Valu ; ee ree o. Komain unchanged 1 Yalu: sa in relative value: jue at first and when GSpital budgeting anc a (029. Aipha and Bet way except for er nt payout ratio. ayerorit margin next year e) Decrease @. Decrease return to are equal in every reatve, are two igend payout, cates. APIS ‘rarply inv aivegtio wine Beta nes 2 40 ve neal value "even this differences: SNE aed the C37 IF tne US collar Currencies of many are two firms that fe relative to the jectines in. valu ners, the likely ‘of its trading part a Beas profit marai "profit margin. F Beis Baier surtmnabe rate of STOW? fesuitethat than does Beta. eu Pt urrencies wil depreciate against (he c. btass plowback ratio Is less an Beta's dollar. plowback ratio. bee Us balance of payments deficit will become 0 rene as nigher internal rate OF growth than worse. oes Beta c. US exports will tend to increase. $. Us imports will tend to Increase. 5 30. firm ts, currently OPeranng at full capacity and = A firm spicient. assets to Just SUDPOT, capacity vy g 38. If the value of the US, dollar 1 feraien currency Sit wns fe are expected fo Increase °e at feveraal markets changes from $1 =6 marks Xo $1 =4 marks Benn sales: Parowth next year. Net woreed the ieand «The Garman mark has depreciated against the ai rate ing. costs are expected tO Vere directly dollar. operat “Tne interest expense, the Oe direct, —_p,_ German imported produets in the US will pecome fs: with f2tgend payout ratio are fixed. The net income more expensive. ‘ive the couuve. Assume you are COmPa0S net inmars cS tourists in Germany will find thelr dollars will Oc sitive, Agratements to this year’s financial buy more German products. *¢ Preements. Which one of the folowing Values _-d-_ US exports to Germany should decrease: : sad be unchanged from this year? . P {9 39. Which of the following factors is least ely Xo affect 2. profit margin b. capital intensity ratio. c. debt-equity ratio d. plowback amount 31. The market for outstanding, called the a, Primary market. b. New issue market. as a percentage of sales listed common stock is ¢. Over-the-counter market. d. Secondary market. 2 country's currency foreign exchange rates? a. Interest rates In the country. b. Political stability in the country, ¢._ Inflation in the country. d. The tax rate in the country. (C40. Which of the follo supply chain management? 2, Information technology. b. Accurate forecasts. wing is not an Important aspect of 132.19 a competitive market for labor in which demand is stable, If wor rkers try to increase their wage c. Customer relations. Employment must fall. of e d. Communications. www. prtc.com.ph MAS.PREWEEKMANAGEMENT ADVISORY SERVICES DEAN APOLINARIO D. BOBADILLA Preweek — Oct. 2019 Siarerunn arn scateaay§ pret 200-75 aBn0 feces —o NO. 8 Answer. C as D/E ratio; 150/159 o Sales: 780,000 + 130,000 = 910,000 oacaogetd amas et ae P/E: 23/250 920% : No.3 cma: (av—2M)+8M 075 Noo Rea. profit before tax: 36M*.15.6 6M nawer : : Target sales: (3M + 6M/.75 uM Dividend yield: 2/23 0.087 : Answer: 8 No. 12 No.4 Inorder to have goal congruence, investimen Composite weight: decision should be evaluated in terms of res No. 19 30/150 20 incorne No. 5 75/150 50 Answer: © No. 53 45/150 30 WACM per unit: (2°4.5) + (57) + (3°6) No.12 =6.20 Ave. Investment: (1.2M +2M)/2 = .6M No.4 ‘Oper. income: 1.1M-.7M = 400,000 Target sales: (961,000 + 161,200)/6.2 . ROI: 400,000/1.6M 25% 181,000 Answer: 8 Model $3: 181,000°.3 54,300 Answer: A NO. 13 ‘Oper. income: 1M -.5M 500,000 No. Less: Minimum returns 2M*.15 300,000 105-(20410+5+ 4) =62 Residual income 200,000 (CM/MH, XR2000: 62/4 15.50 Bonus: 200,000°.2 49,000 Variable cost per unit, Answer: © KT6500 27412 +645 50.00 Opportunity cost 3 hrs.*15.5 46.50 No.14 Minimum price 96.50 Net income: (35M ~5M).6 em Answer: B Income to common: 18M — aM. 14M Dividend per share — common No.6 14M*.30+2M 2.20 Variable cost (20 +15 +12 +3)= 50 Answer: D ‘Opp. cost (10,000/1,000) 10 Relevant cost per unit co) No. 15 Answer: A EPS: 14M 32M. 7.0x Market price: 7*8 P56 No. 7 Answer: B om 23 DL R No. 16 vou 10 KS = Kar + BlKaaa— Kae) Var. admin. Cost 2, = 5% + 6(12%-5%) Total 47 Answer: A. Opportunity cost (100~38-22-19.5+25 18 NO. 17 Ks = 6% + 1.3(11% - 6%) =12.5% 30.67 Maximum price 6 Page 1 of 3samy an2%6 7933 Lotet purchase 52,000 2,000*.65* 44320 03 Deprec tax shieig ee 6.067+2 ean (as.202 PV, Lease payments a 14,500" 652 6a0e4 25.26 Advantage ~ Lease 3698 No. 21 uv 40,000 72x shield: (40,000. 60,000,2 “eave Net proceeds 44,000 Answer ¢ No. 22 10,000 + 6587 + 0.65, 23,356 Answer: 8 No. 23 (7.4M*.4371)- 3.5 = 265,460 Answer: ¢ No. 26 Cash flow before tax: 2,000°50 100,000 ‘Annual ATCF: (100,000*.6) + (20,000°.4) = 68,000 ‘Note: Recalculate by ignoring the salvage value in the computation of depreciation, Deprec: (105,000/5) 21,000 AATCR: (100,000*.6) + (21,000*.4) = 68,400 No.3 Inditference Rave: Dit incost/DAL in investment } (6,050,000 6,000,010}/(000 No. 34 Alternative ‘8 360*700) 126,000 ™ 8 125,000 © 360*700%1,800% 0003 Lye gn, 1 D_3,750,000%.07 122,500 Answer: D owest co No. 35 Interest: 100,000¢ 1 Service fee: 125,000*.02+12 Total Less cost savings, Net cost k= 16000/100000 Answer: 10,000 30,000 40,000 24,000 46,090 16% NO. 37 Net collections: 700 units x 10 x.98, Answer: ¢ 6,860 No. 38 Marginal propensity to save: Increase in savings/increase in income Increase in savings: 500 ~ (2,800 - 2,500) Answer: A 200 Marginal propensity to save: 200/500 40% No. 27 Answer: B The deprec. period used is 5 years though the life 1s 10 years, NO. 39 After tax annual cash inflow Current breakeven units: ae 100,000°.6 60,000 340,000 + (123.50) J TF ata = ~~ Page 2 of 8herrea) a ad te, 3s Siz (earn fe 2036 (siz (20.96 x2) 512 Sov% (Not) + (300".48) + (500"-25) + (700°.35) Sto Brower: 8 ote (500,06 500,000)/ ne AE ayn (500,000 + 620,0001/2 red 550,000 ccountsaies: $50,000°5 2,750,000 ash sales 709.090 ota sales 3.950,000 answer: A coos” 300,000 Aad inventory end 180,000 Wir ovatieie for sale 1,080,000 Less purcheses 950,000 120,000 Beginning inventory ‘ave. inventory:(1207 + 180T}/2 = 150,000 Inventory turnover: 900,000/150,000 = 6X No. 47 k211+ (100-9) 12.09% Answer: C No. 48 Cost of foregoing cash discount K = 2/98 x 360+ 30 29.49% No. 49 Present value: Years 1-5 (420,000*3.79) 1,591,800 Year 6 (100,000"0.56) 56,000 Total 1,647,800 Investment 1,800,000 Negative NPV 152,200) Answer: C Werreet cena % New Unit ast 900"5 5) ~400,000 = 205.000 No38 - Sie Pree qggot/aer = Seat gene OO sys. 00 2 é s 1 Profit per unit 26 Order size 35,000 Excess capacity ‘42.002 ‘Regular sales given up 3.000 No. 53 Additional profit (15,0026) 380,000 Current profit 315,000 New profit 705,000 Answer: B No. 54 Sales price ~ special sale 23 Deduct: Regular variable cost 16 Additional OT cost a Profit per unit 4 Unit sales 40,900 Additional profit 169,009 Answer: C No. 55 The closure of South Division would mean to give Up the segment margin of P30,000. As there is no avoidable common cost, the profit for the company would decrease by P30,000. ‘Answer: P30,000 lower