Answers Test 1 & 2 Group A/B 2019 – 2020

1/3. Answer: b

OA = CF0 + CF1/1,1 = 0,00 + 110/1,1 = 100

AG = -EA + EG = -20 + (22) / 1,1 = 0

OG = OA + AG = 100

C1 = OH = OG x (1,1) = 110

2/1. Answer: b

OG = C0+C1/1,1 = 100 + 88/1,1 = 180

OA = CF0 + CF1/1,1= 40 + 44/1,1 = 80 → AG = 100

AG = -EA + EG = -EA + (154) / 1,1 = 100 → EA = 40

3/2. Answer: c

OG = C0+C1/1,1 = 80 + 0/(1+r) = 80

OG = OA + AG = CF0 + CF1/(1+r) – Investment + Revenue t=1 /(1+r) = 80 →

25 + 30/(1+r) – 40 + 84 /(1+r) = 80 → r = 20%

4/6. Answer: d

Buy at 76,06 and sell at 76,02: 76,02 < 76,06, therefore no profit possible

5/4. Answer: a

Net Working Capital = Current Assets – Current Liabilities = 46.000 – 28.000 = 18.000
Enterprise Value = Market Value of Equity + Debt – Cash
If Stock Price = 75, Enterprise Value = 75 * 2.000 + 11.000 + 12.000 + 98.000 – 21.000 = 250.000
If Stock Price = 65, Enterprise Value = 65 * 2.000 + 11.000 + 12.000 + 98.000 – 21.000 = 230.000

6/5. Answer: c

15.000 – 18.000/(1,1^2) = 123,97

7/8. Answer: d

8/9. Answer: b, see solution 7/8 above

9/7. Answer a

PV of the difference in maintenance costs: 700/1.05 + 700/1.052 + 700/1.053 = 1.906,27

The difference in purchase price is higher than the difference in the present value of the yearly
maintenance costs. Management prefers machine A, with the lower purchase price.

10/12. Answer: c

(1+r2) = [(1+r1)(1+1f2)]0,5 = [(1,05)(1,04)]0,5 = 4,50%

(1+r3) = [(1+r1)(1+1f2) (1+2f3)]1/3 = [(1,05)(1,04)(1,03)]1/3 = 4,00%

11/10. Answer: b

The yield of a zero coupon bond is equal to the spot rate where t is equal to the maturity of the
bond. P = 1.000 / (1+r3)3 = 1.000/(1+y)3

12/11 Answer: d
PA = 1.000 = 1020/(1+r1) → r1 = 2%
PB = 982,53 = 40/(1,04) + 1040/(1+r2)2 → r2 = 5%
1f2 = (1+r2)2/(1+r1)-1 = (1,05)2/(1,02) -1 = 8,09%