IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 241:

  A company's stock trades rights-on for $50.00 and ex-rights for $48.00. The subscription price for rights holders is $40.00, and four rights are required to purchase one share of stock.The value of a right while the stock is still trading rights-on is

  A. $0.40
  B. $0.50
  C. $1.60
  D. $2. 00
  D. $2. 00

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  Explanation

• Question 242:

  Logistics Corp. is performing research to determine the feasibility of entering the truck renal industry. The decision to enter the market is most likely to be deterred if

  A. Buyer switching costs are high
  B. Buyers view the product as differentiated
  C. The market is dominated by a small consortium of buyers
  D. Buyers enjoy large profit margins
  C. The market is dominated by a small consortium of buyers

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  Explanation

  When purchasing power is concentrated in a few buyers or when buyers are well organized, their bargaining power is greater. This effect is reinforced when sellers are in capital-intensive industry such as trucking.

• Question 243:

  Yipann Corporation is reviewing an investment proposal. The initial cost, as well as other related data for each year. are presented in the schedule below. All cash flows are assumed to take place at the end of the year. The salvage value of the investment at the Yipann uses a 24% after4axtargetrate of return for new investment proposals. The discount figures for a 24% rate of return are given.

  

  The net present value of the investment proposal is

  A. $4,600
  B. $10,450
  C. $(55,280)
  D. $115,450
  B. $10,450

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  Explanation

• Question 244:

  Von Stutgatt International's breakeven point is 8,000 racing bicycles and 12,000 5- speed bicycles. If the selling price and variable costs are $570 and $200 for a racer, and $180 and $90 for a 5-speed respectively, what is the weighted-average contribution margin?

  A. $100
  B. $145
  C. $179
  D. $202
  D. $202

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  Explanation

• Question 245:

  A company has daily cash receipts of $150,000. The treasurer of the company has investigated a lockbox service whereby the bank that offers this service will reduce the company's collection time by four days at a monthly fee of $2,500. money market rates average 4% during the year, the additional annual income (loss) from using the lockbox service would be

  A. $6,000
  B. $(6,000)
  C. $12,000
  D. $(12,000)
  B. $(6,000)

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  Explanation

  It daily cash receipts are $150,000, and the lockbox service will speed collection by four days, the company will have available an additional $600,000 ($150,000 x 4 days). The result is increased interest revenue of $24,000 ($600,000 x 4% interest rate). However, the $2,500 monthly service charges total $30,000 for the year, which is a $6,000 net loss ($24,000 interest revenue - $30,000 monthly service charges).

• Question 246:

  The capital budgeting model that is generally considered the best model for long-range decision making is the

  A. Payback model.
  B. Accounting rate of return model.
  C. Unadjusted rate of return model.
  D. Discounted cash flow model.
  D. Discounted cash flow model.

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  Explanation

  The capital budgeting methods that are generally considered the best for long-range decision 1making are the internal rate of return and net present value methods. These are both discounted cash flow methods.

• Question 247:

  Post-investment audits?

  A. Complete a stage in the capital budgeting process.
  B. Sieve as a control mechanism.
  C. Allow the outcome of a project to be evaluated as soon as possible
  D. Deter managers from proposing profitable investments
  B. Sieve as a control mechanism.

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  Explanation

  Post-investment audits should be conducted to serve as a control mechanism and to deter managers from proposing unprofitable investments. Actual-to-expected cash flow comparisons should be made, and unfavorable variances should be explained. Individuals who supplied unrealistic estimates should have to explain Differences.

• Question 248:

  Two compares are expected to have annual sales of I .000.000 decks at playing cards next year Eirne1es for next year are presented below:

  

  Given these data, which of the following responses is rue?

  

  A. 800.000 420.000 1.180,000
  B. 800.000 420,000 1000,000
  C. 533,334 106. 000 1.000,000
  D. 533,334 105. 000 1,180,000
  A. 800.000 420.000 1.180,000

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  Explanation

• Question 249:

  The marketing communication mix consists of five types of promotional tools or media. Electronic mail belongs to which class of promotional tools or media?

  A. Direct marketing.
  B. Advertising.
  C. Public relations.
  D. Personal selling.
  A. Direct marketing.

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  Explanation

  Direct marketing involves sending a promotional message directly to consumers rather through a mass medium. Some examples are email, voice mail, fax, mail, telemarketing, and home shopping by television.

• Question 250:

  The technique that incorporates the time value of money by determining the compound interest rate of an investment such that the present value of the after-tax cash inflows over the life of the investment is equal to the initial investment is called the

  A. Internal rate of return method.
  B. Capital asset pricing model.
  C. Profitability index method.
  D. Accounting rate of return method.
  A. Internal rate of return method.

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  Explanation

  The internal rate of return (IRR) is the discount rate at which the present value of the cash inflows equals the present values of the cash outflows (including the original investment). Thus, the NPV of the project is zero at the IRR. The IRR is also the maximum borrowing cost the firm can afford to pay for a specific project. The IRR is similar to the yield rate/effective rate quoted in the business media.