A+ Graded Paper
BUSI 320 – Final Exam Guide | Full Solutions,
Questions & CPA-Style Practice (Graded A)
Questions and Mark scheme
Version: Final 1.1
, Terminal Cash Flow - ✔✔the after-tax non-operating cash flow occurring in the final year of a project. It is usually
attributable to liquidation of the project.
Real Options - ✔✔the right but not the obligation to take some future action
When does capital rationing occur - ✔✔When there is not enough funding to fund independent projects
Initial investment formula - ✔✔Cost of new asset
+ installation
- after tax proceeds from sale of old
= initial investment
beta coefficient - ✔✔A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the
market as a whole.
risk adverse - ✔✔A general preference for options that do not involve possible loss over options that involve possible
gain, even when the expected value is higher for the option that describes a loss
coefficient of correlation - ✔✔a measure of correlation that ranges in value from -1.00 to +1.00 and represents extent of
correlation among various projects and investments
residual owners - ✔✔owners/stockholders of a firm, who are entitled to dividend income and a prorated share of the
firm's earnings only after all other obligations have been met
For single projects what must always be the same - ✔✔NPV AND IRR
effective rate formula - ✔✔(interest/prinicipal) X (360)/days loan outstanding
Floatation - ✔✔Difference between firm's recorded amount and amount credited to firm by bank
- mail float and clearing float
It costs more to ____ stock than use ____ - ✔✔Issue, retained earnings
BUSI 320 – Final Exam Guide | Full Solutions,
Questions & CPA-Style Practice (Graded A)
Questions and Mark scheme
Version: Final 1.1
, Terminal Cash Flow - ✔✔the after-tax non-operating cash flow occurring in the final year of a project. It is usually
attributable to liquidation of the project.
Real Options - ✔✔the right but not the obligation to take some future action
When does capital rationing occur - ✔✔When there is not enough funding to fund independent projects
Initial investment formula - ✔✔Cost of new asset
+ installation
- after tax proceeds from sale of old
= initial investment
beta coefficient - ✔✔A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the
market as a whole.
risk adverse - ✔✔A general preference for options that do not involve possible loss over options that involve possible
gain, even when the expected value is higher for the option that describes a loss
coefficient of correlation - ✔✔a measure of correlation that ranges in value from -1.00 to +1.00 and represents extent of
correlation among various projects and investments
residual owners - ✔✔owners/stockholders of a firm, who are entitled to dividend income and a prorated share of the
firm's earnings only after all other obligations have been met
For single projects what must always be the same - ✔✔NPV AND IRR
effective rate formula - ✔✔(interest/prinicipal) X (360)/days loan outstanding
Floatation - ✔✔Difference between firm's recorded amount and amount credited to firm by bank
- mail float and clearing float
It costs more to ____ stock than use ____ - ✔✔Issue, retained earnings
