University of Lagos: School of Postgraduate Studies
University of Lagos: School of Postgraduate Studies
University of Lagos: School of Postgraduate Studies
M.sc Finance
pg. 2
A. N10,725.00 B.N10,028.00 C. 10,408.00 D.
N13,231.00
A fast food chain has given the following information about its revenue
and costs relating to a new project
Building and equipment
N540,000
Annual revenue
N650,000
Annual operating cost after depreciation N350,000
The firm's corporate income tax is 35%
a. 2.5% b. 5% c. 50%
d. 1.25% e. 1%
pg. 3
C. The dilution of ownership control D. The
pricing of the issue
pg. 4
C. they carry prior right to a fixed dividend
and seniority of claims over ordinary
D. they hear both features of pure equities and
debt capital
pg. 5
C. Dividend is synonymous with the proverbial
"bird in the hand being worth more that two in
the bush"
D. Differential taxation on capital gain and
dividend influence firms to develop their
clientele of shareholders.
15 The management of one of the firms quoted on
the Nigeria stock exchange is trying to decide
on its dividend policy. the maximum annual
dividend that can be paid this year is 8 kobo
per share, Retaining a proportion of profits
would allow the firm to re-invest earnings in
order to achieve dividend growth. Four options
are therefore under consideration:
Current dividend
Annual dividend
Option A 8K (100% of earnings) 0%
per annual
Option B 6K (75% of earnings)
6% per annual
Option C 4K (50% of earnings)
8% per annual
Option D 2K (25% of earnings) 12
1/2% per annual
pg. 6
experience shows that storage cost are likely
to be approximately equal to 10% of the
inventory investment. The cost of placing an
order amounts to N9. Using the information
answer the questions that follow:
A. 100 B. 10 C. 4
D. 32
pg. 7
If variance of 10% is projected from the base case
scenario.
What will the best-case scenario NPV of this
project be?
Old Machine
New Machine
Purchase price N240,000
N260,000
Installation cost -
N30,000
Market value now N200,000 -
Salvage value -
N60,000
Additional stock -
N5,000
Economic life 8 years 5
years
A.N172.500.00 B.N130,000.00 C.
N112,500.00
D. N135,000.00
pg. 8
A. N1,661.00 B. N14,817.00 C. N11,389.00
D. N846.00
N'000
Sales (credit) 5,640
Gross profits 4,060
Net profits after tax 760
Debtors 930
Stocks 1,250
Current assets 2,410
Current liabilities 4,370
Total assets 4,620
pg. 9
27. What is firm’s stock (inventory) turnover?
pg. 10
b. N202
c. N2000
d. N202
pg. 11
(a) 14.43
(b) 13:33
(c) 13.87
(d) 13.00
pg. 12
c. N200.00, N312.50
d. N267.00, N380.00
44. Suppose the firms has a weighted average cost of capital of 101/2%
assuming it has net operating earnings of N20,000 and a debt stock worth
N15,000 issued at 8% rate of interest per annum, what is the market
value of its equity?
A. N175,476.19
B. N179,048.00
C. N35,500.00
D. N90,476.20
45. which of these statements does not appropriate explain the importance
of inventory (stock) management in business firms?
a. N300,000
b. N125,000
c. N375,000
d. N225,000
48. Which of these characteristics does not distinguish equity capital from
debt capital?
49. Mama Kola sells an item for N4,620 at a profit of 40%. Find the price
at which she bought the item
a. N2776
b. N3300
c. N1848
d. N1320
e. N1840
50. Odumakin enterprises called for bids for the supply of heavy
equipment. Two contractors A and B with chance of ¼ and 2/5
respectively of being shortlisted made quotations for the supply of the
equipment. Find the probability that only one of the two will be shortlisted.
pg. 14
(a) 3/20
(b) 9/20
(c) 6/20
(d) 7/20
51. Odigwu has a 36-month car loan of N50,000 at 12% interest rate per
annum. What is the monthly loan repayment?
52. Everest & Sons has a N1 million bond issues outstanding. Assuming it
can earn 8% per annum on its investment. How much would it need to
invest each year in order to accumulate enough money to retire the bond
at the end of 20 years( to the nearest Naira)?
53. Which of the following factors will not tend to an increase in a firms
profit margin?
55. Jejeniwa & Co has 420 employees, out of these, 310 participate in at
least one of the company’s two payroll savings plans. If 250 participate in
plan A and 200 participate in plan B, how many participate in both payroll
savings plan?
a. 310
b. 280
c. 30
pg. 15
d. 450
e. 140
56. Which of the method of issuing new ordinary shares directly to existing
shareholders of the firm?
A. an offer for sale
B. An offer for sale by tender
C. a public issue
D. a right issue
58. A firm uses 25,000 units of raw materials 800 units are placed on
order each time. if stock out is estimated at 250 and management accepts
a stock -out probability of 30% at a cost of N2.80 per unit. What is the
total stock-out cost?
A. N6, 562.50
B. N26.30
C. N15,312.50
D. N2.3
pg. 16
60. What the firm equity cost of capital?
A. 10.50%
B. 9.87%
C. 10.71%
D. 8.77%
pg. 17