FIN 575 Final Exam

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FIN 575 Final Exam Questions With Answers
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• 1. During the project initiation, a project
  charter is created. The project charter should
  include which of the following?
• Project managers expenses
• Analysis of budget
• Selection of the senior project manager
• Projects high-level deliverables
• 2. A project's budget should be based on a
  companys
• strategy and financial goals
• profitability
• financial goals and equity
• debt load and equity

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• 3. Earned value management is a technique used to
  integrate projects
• resources
• scope, schedule, and resources
• schedule, costs, and benefits
• costs and profits
• 4. Bills Billiards has total assets of 8
  million and a total asset turnover of 2.9 times.
  If the return on assets is 11, what is Bill's
  profit margin?
• 11
• 4.10
• 2.50
• 3.79

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• 5. What are the acceptance criteria for NPV?
• If the NPV is less that 0, accept the project.
• If the NPV is greater than 0, accept the
  project.
• If the IRR is equal to 0, reject the project.
• If the NPV is equal to the discounted payback,
  accept the project.
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  575 Final Exam
• 6. The risk response plan answers what question?
• What can be done if risk occurs? What is the
  backup plan?
• What are project costs?
• There is no need to plan for risk seldom occurs
  in a project.
• How risk is to be managed

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• 11. The R. M. Senchack Corporation earned an
  operating profit margin of 6 based on sales of
  11 million and total assets of 6 million last
  year. What was Senchacks total asset turnover
  ratio?
• 1
• 0.54
• 5.4
• 1.8
• 12. Why is the communication plan a crucial
  factor in project success?
• Ensures the timely generation, collection,
  storage, and disposition of project information
• Facilitates upper management communication with
  the workers
• Reduces rumors in the organization
• Communicates the economic value of the project to
  management

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• 13. A companys assets are financed with
• debt
• equity
• equity or debt
• equity and debt
•  
• 14. Part of financial planning for projects
  involves the understanding of the inflows and
  outflows of cash that will be created by the
  project. What tool can be used to track these
  cash flows?
• A NPV flow sheet
• Profitability work sheet.
• Project cash flow worksheet
• Cash flow table

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• 15. Stokes, Inc. has net working capital of
  7,900, current liabilities of 5,220, and
  inventory of 2,000. What is the quick ratio?
• 1.89
• 1.13
• 1.21
• 2.1
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  575 Final Exam Online UOP Homework Help
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• 16. What ratio measures a firms degree of
  indebtedness?
• Debt ratio
• Quick ratio
• Fixed coverage ratio
• Times interest earned ratio

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• 17. Which one of these terms is a type of debt
  financing?
• Stock repurchases plans
• Collateral
• Trade credit
• Bearer bonds
•  
• 18. The sum of the percentage of equity and debt
  multiplied by their respective cost is called
• weighted average cost of capital
• capital asset pricing model
• market value added
• economic value added.

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• 19. Profitability ratios all have what same
  figure in the numerator?
• Book value per
• Net income
• Price per share
• Total assets
•  
• 20. Terrys Trash removal has a total debt ratio
  of 0.45. What is the firms debt-to-equity ratio?
• 1.27
• 0.41
• 0.82
• 1.82
•  
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• 21. An investment in a project should be
  undertaken only if the expected return is greater
  than the
• NPV
• WACC
• payback method
• economic value added
•  
• 22. Brenda Smith, Inc. had a gross profit margin
  (gross profits sales) of 25 and sales of 9.75
  million last year. Seventy-five percent of the
  firms sales are on credit and the remainder are
  cash sales. Smiths current assets equal
  1,550,000, its current liabilities equal
  300,000, and it has 150,000 in cash plus
  marketable securities. If Smiths accounts
  receivable are 562,500, what is its average
  collection period?
• 25 days
• 32 days
• 28 days
• 14 days

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• 23. You are considering a project with an initial
  cash outlay of 160,000 and expected free cash
  flows of 40,000 at the end of each year for 6
  years. The required rate of return for this
  project is 10. What is the projects payback
  period?
• 4 years
• 4.5 years
• 6 years
• 5 years
•  
• 24. Project managers manage project cost by
• monitoring inventory costs
• monitoring opportunity costs
• ensuring the work is progressing as planned
• ensuring retail costs are controlled

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• 25. What is the primary weakness commonly
  associated with the use of the payback method to
  evaluate a proposed investment?
• This approach fails to take into account the time
  factor in the time value of money.
• The payback method uses the discounted cash flow
  process.
• The payback method is able to recognize cash
  flows that occur after the payback period.
• The payback method is not appropriate for
  evaluating small projects.
•  
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  Final Exam Answers
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• 26. Fijisawa, Inc. is considering a major
  expansion of its product line and has estimated
  the following free cash flows associated with
  such an expansion. The initial outlay associated
  with the expansion would be 1,950,000, and the
  project would generate free cash flows of
  450,000 per year for 6 years. The appropriate
  required rate of return is 9. Calculate the net
  present value and the internal rate of return.
• NPV66,098, IRR10.5
• NPV72,097, IRR9.5
• NPV68,663, IRR10.2
• NPV69,368, IRR10

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• 27. Cost normally falls into the domain of
  managerial accounting and has 4 essential
  proposes. Select the answer that is an essential
  function of cost.
• Used to calculate earned value cost
• Used to calculate executive stock options
• Used to calculate inventory costs
• Used for planning future activities or budgets
•  
• 28. Select the answer that is an example of a
  cost classification?
• Credit cost
• Fixed cost
• Retail cost
• Inventory cost

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• 29. What are the four secondary processes in
  project control?
• Schedule control, change control, risk control,
  and quality assurance control
• Value control, Inventory control, schedule
  control and quality control
• Organizational control, cost control, inventory
  control, and risk control
• Stakeholder control, organization control, risk
  control, and change control
•  
• 30. Stokes, Inc. has net working capital of
  7,900, current liabilities of 5,220, and
  inventory of 2,000. What is the current ratio?
• 2.1
• 0.77
• 1.89
• 1.51

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