Ryerson University: Midterm Exam

Please answer all questions in this exam. Answers to the multiple choice questions need to be filled in on the scantron sheets (remember to use pencil to fill in the circles) and also circled on the exam itself. Answers to the short answer questions should go in the exam booklet provided. All three components (scantron sheets, exam booklets, paper copy of exam) should be turned in at the conclusion of the exam.

The fixed cost is assumed that Larry has discovered the other fixed cost incurred. The total investment is $800,000. The worst case scenario assumes that Larry got a total line of credit from the bank in the amount of $400,000 and invested $400,000 from other source. The Notes payable – short term and the long-term debt is (11.8 + 3.7) = 15.5 % from Table F in the handout. The Loan interest and payment per year is ($400,000 * 0.155)= $62,000. The Income data from Table F indicates that there is a 0.4% of all other expenses net out of the total sales which equals to $109,908 (5,700,666 gallons * $4.82 *0.4%) .

- Complete all of the details required on the front page of the examination booklet. - Make sure that you note the SIX(6) questions attempted on the front of your examination booklet - If Seven questions are attempted, the first SIX(6) will be marked. - You may use a non-programmable calculator - Graph paper will be provided. - Answers are to be written in ink. Pencils are permitted for graphing purposes. - The

9. What is the Cost of Debt, before and after taxes? Using the interest rate for the largest debt…cannot use the weighted interest rate for the debt since it includes capital lease obligations with no stated rate and could not find in the notes to the financials. 5.4% After tax cost is .054 x (1-.36) = 3.5%

and types of questions) will be presented at the start of the class prior to the exam. The

If necessary, use the back of the exam pages for the rest of your answers. Do not use other sheets of paper. Please write legibly; if I cannot read your answer, I will count it wrong.

Note to students: This is a closed-book exam, containing 3 questions, worth 30 marks in total. Apart from sundry writing materials (pens, pencils and the like), no examination aids are permitted

Commercial Capital Corporation is the leasing subsidiary of a major regional bank and offers a lease at 12.75 million per year for 4 years. The first payment is due upon delivery and installation. The rest of the payments are due each subsequent year at the beginning of the year. This cost includes the same service contract as what would have been obtained with purchase.

Equator - imaginary line at 0° latitude that divides the earth into the northern and southern hemispheres

9. You want to purchase a business with the following cash flows. How much would you pay for this business today assuming you needed a 14% return to make this deal?

General Instructions: • Write your name and student ID clearly above. • You have 1 hour and 15 minutes to write the exam. No extra time will be given. • There are 4 questions in the exam, all with subparts. The questions combine for a maximum of 100 points. • You must write your answers clearly in the space provided for each question. You might use the backside of each page, as well as any additional sheets as required. If you are using additional space, you must clearly label the question no. that you are answering. Any loose sheets must have your name and student ID written clearly. • The exam is open book/open notes, however,

You are allowed to bring pens, a two-sided cheat sheet (8.5 x 11 inches), pencils, simple function calculators to the exam.

My purpose in writing this book is to give you the knowledge to succeed. I have written it to be as close as I can to the actual test; however, I do not claim that this practice exam is the same as the real test. The questions I’ve included are only examples of the ones that are asked on the actual exam. They are not the actual questions. That would be impossible because the questions

Since we are not provided with the information or evidence about cash inflow needed to calculate the Net Present Value, we assumed three different scenarios to cover all possible outcomes.

5. How material are assets acquired under capital leases in relation to total property and equipment?