Online Access Free CMA-Strategic-Financial-Management Exam Questions

FreeRide inc is considering replacing its existing shuttle bus win a new one. The new bus can offer considerable savings in operating costs Information about the existing bus and the new bus is shown below.

• A.current salvage value of the existing bus
• B.original cost of the new bus.
• C.annual operating cost of the new bus
• D.accumulated depreciation of the existing bus

Southwest Supplies Inc. (SSI) is considering the following two projects with cash-flows discounted at SSI's weighted average cost of capital.

SSI can only afford to invest in one of the projects. Which statement would most likely explain why SSI would choose Project B over project A?

• A.Project B results in a higher cumulative accounting income
• B.Project B cash-flows are relatively more certain
• C.Project B generates significantly more non-cash expenses
• D.Project B cash-flows are to be received sooner

A capital budgeting analysis involves an initial investment of $500. The expected cash inflow in Year 1 is
$300, and the expected cash inflow in Year 2 is $350. Which one of the following equations can get the correct internal rate of return (IRR) of this project?

• A.$0 = $300/(1 + IRR) + $350/11 + IRR)2
• B.$500 = $300/(1 + IRR) + $350/(1 + IRR)
• C.$500 = $300/(1 + IRR) + $350/(1 + IRR)2
• D.-$500 = $300'(1 + IRR) + 5350/(1 + IRR)2

Below is the income statement and balance sheet for a retail corporation.

What is the corporation's return on equity in Year 2?

• A.26%
• B.48%
• C.23%
• D.39%

To minimize me risk of a two-stock portfolio, a company should most likely purchase stocks that have

• A.negatively correlated expected returns
• B.positively correlated expected returns
• C.equally correlated expected returns
• D.no correlated expected returns