P4218-Strategic Financial ManagementǀMidtermExaminationǀ1st semester

2019-2020
Date of Examination: October 9,
2019

Republic of the Philippines

PALAWAN STATE UNIVERSITY
Brooke’s Point, Palawan
Test I – Multiple Choice
Identify the letter of the choice that best completes the statement or answers the questions.

1. "Shareholder wealth" in a firm is represented by:

A. Number of people employed in the C. The amount of salary paid to its
firm employees
B. Book value of firm’s assets minus D. Market price of firm’s common
liabilities stock
2. The following are functions of strategic Financial Management,except
A. Maximizing shareholder wealth C. Dividend decision
B. Investment decision D. Financing decision
3. A/An _____ is an organizational structure that utilizes various levels of authority and a chain of
command between superior and subordinate levels of organization
A. Hierarchy C. Organizational Chart
B. pyramid D. Classification

4. An organization structure lays the foundation of how a company ______.

A. operates C. Implements Decision
B. Makes Decision D. All of the above
5. He/she is the one who has the major responsibilities on behalf of the shareholders.
A. Chairman of the Board C. CEO
B. Board of Directors D. COO
6. The one who is involved with the strategic direction of the organization is known as
A. Chairman of the Board C. CEO
B. Board of Directors D. COO
7. The one who represents the shareholders is called?
A. Chairman of the Board C. CEO
B. Board of Directors D. COO
8. Responsible for the day-to-day operation
A. Chairman of the Board C. CEO
B. Board of Directors D. COO
9. It is the long term investment of the firm
A. Capital Budgeting C. WACC
B. Capital Structure D. None of the above
10. The rate that a company is expected to pay on average to all its security holders to finance its
asset.
A. Capital Budgeting C. WACC
B. Capital Structure D. None of the above
11. Companies raise money from several sources. The following are the sources, except
A. Common Stock C. Debt
B. Preferred Stock D. None of the above
12. To compute the Weighted Average Cost of Capital we need the following,except
A. Cost of Equity C. Net income
B. Cost of Debt D. None of the above
13. Which of the following is a type of investment decision?
A. Based on expansion C. Discounted Cash flow
B. Based on dependency D. All of the above

Prepared by Joel M. Pangisban 1

P4218-Strategic Financial ManagementǀMidtermExaminationǀ1st semester
2019-2020
Date of Examination: October 9,
2019

14. It can be find by subtracting present value cash outflows from present value cash inflows.
A. Net Asset Value C. WACC
B. Net Present Value D. Payback Period
15. It is the number of years required to recover the original cash outlay invested in a project.
A. Net Asset Value C. WACC
B. Net Present Value D. Payback Period

Test II – Identification. Identify the following as an expense or an asset. Write E for expense and A for
asset.
1. CFO’s Salary 9. Patents
2. Telephone Bill 10. Copyright
3. New Production Facility 11. Prepaid Rent
4. Training 12. Depreciation
5. Advertising 13. Utilities
6. Research and Development 14. Employees
7. Computer Equipment 15. Cash
8. Employee’s Salaries

Test III. Computation. Time Value of Money (5 points each)

1. 1.Yanachie wants to have P20,000 in her investment account 3 years from now. How much
doesshe have to deposit today to achieve her goal if she can earn 4percent compounded semi-
annually?
a. P16,670 b.P17,760 c. P22, 520 d.P25,250
2. You have been offered a business opportunity that will pay you 16,110 in 5 years if you invest
10 000 today. What is the expected rate of return on this investment if it is compounded annually?
a. 5 percent b. 8 percent c. 9 percent d. 10 percent

Kim Daganta decided to Deposit A Lump Sum Amount of P10,000 in Gamos’ Bank with an Interest of 12%.
What would be the Amount of Kim Daganta’s Deposit After 5 years if:

3. It is Compounded Annually
4. It is Compounded semi- annually
5. It is Compounded Quarterly

6. What is the present value of a stream of P2,500 semiannual payments received at the end of each
period for the next 10 years? The Interest rate is 6%.

A. P37,194 C. P35,810
B. P38,310 D. P36,885

7. What is the future value in 10 years of P1,500 payments received at the end of each year for the
next 10 years? Assume an interest rate of 8%.

A. 25,260 C. 21,730
B. 23,470 D. 18,395

Prepared by Joel M. Pangisban 1

P4218-Strategic Financial ManagementǀMidtermExaminationǀ1st semester
2019-2020
Date of Examination: October 9,
2019

8. You are saving up for a down payment on a house. You will deposit $600 a month for the next 24
A. 14,480
months in a money market fund. How much will you have for C. 12,930
your down payment in 24 months if
the B.
fund15,870
earns 10% APR compounded monthly? D. 10,560

What is the present value of a stream of P1000 payments received at the end of each period for the
next 4 years? The Interest rate is 12%.

9. If it is compounded annually
10. If it is compounded quarterly

Test IV. Computation. Net Present Value

JK products is considering investing in either of the two competing projects that will allow the firm to
eliminate a production bottleneck and meet the growing demand for its products. The firm has an 11%
required return and views these projects as equally risky.

Year Project SQ Project HT

Cash flows
0 Php-670,000 Php-940,000
1 250,000 170,000
2 200,000 180,000
3 170,000 200,000
4 150,000 250,000
5 130,000 300,000
6 130,000 550,000

Compute for NPV and Payback period. Decide which project will be more advantageous to pick base on
your computations.

Test V. Creating

Think of a certain business that you want to have in the future and make your own Organizational
Structure. (10pts)

Prepared by Joel M. Pangisban 1