IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 631:

  A company has a computer that it no longer needs because of a discontinued operation. Currently, there are several computer projects that may be able to use the machine but some modification will be necessary if such new application is to be successful. Which of the following techniques is most appropriate to use?

  A. Attribute listing.
  B. Operations research.
  C. Morphological matrix analysis.
  D. Synaptic.
  A. Attribute listing.

  ---

  Explanation

  Attribute listing is applied primarily to improve a tangible object. It lists the parts and essential features of the object and systematically anoles modifications intended as improvements.

• Question 632:

  Personal selling is the promotion tool that is

  A. The cheapest
  B. The most effective in the end stage of marketing.
  C. Effective because it is impersonal.
  D. Least effective when customers feel some obligation.
  B. The most effective in the end stage of marketing.

  ---

  Explanation

  Personal selling involves human interaction and mutual observation. It is the best method of inducing action in the end stages of the purchasing process. Among the platforms are meetings, presentations, fairs, and trade shows. Personal selling allows the development of relationships and may generate a sense of obligation by 1jthe potential customer.

• Question 633:

  A company has unlimited capital funds to invest. The decision rule for the company to follow in order to maximize shareholders' wealth is to invest in all projects having a(n)

  A. Present value greater than zero.
  B. Net present value greater than zero.
  C. Internal rate of return greater than zero.
  D. Accounting rate of return greater than the hurdle rate used in capital budgeting analyses.
  B. Net present value greater than zero.

  ---

  Explanation

  If the net present value (NPV) of an investment is positive, the project should be accepted (unless projects are mutually exclusive). If the NPV is negative, the investment should be rejected.

• Question 634:

  In a market research application, which form of contact is the most costly and administratively complex but also the most versatile?

  A. Mail questionnaire.
  B. Online contacts.
  C. Telephone contact.
  D. Personal interviewing.
  D. Personal interviewing.

  ---

  Explanation

  Contacts may be via arranged interview, intercept interview (e.g., requesting an interview from a person on the street), telephone, the postal service, or online. Personal interviewing is the most versatile method. It provides opportunity for additional questions and observational advantages (such as viewing of body language and attire). However, it is costly and administratively complex.

• Question 635:

  The amount Morton Company must borrow to pay the supplier within the discount period and cover the compensating balance is

  A. $55,000.
  B. $55,056.
  C. $55,556.
  D. $54,444.
  D. $54,444.

  ---

  Explanation

  The company will need $49,000 (98% x $501000) to pay off the invoice. In addition, it will need a compensating balance equal to 10% of the loan. This can be written in equation form as:

  Loan $49,000 + (.1) Loan.

  Thus, the loan amount needed is $54,444 ($49,000 ?.9).

• Question 636:

  Which industry factor does not contribute to competitive rivalry?

  A. Price-cutting, large advertising budgets, and frequent introduction of new products.
  B. A firm's growth must come from winning other firms' customers.
  C. High costs of switching suppliers.
  D. High fixed costs.
  C. High costs of switching suppliers.

  ---

  Explanation

  If it is expensive to switch suppliers, customers will be less motivated to respond to competitor advances.

• Question 637:

  The primary difference between centralization and decentralization is

  A. Separate offices for all managers.
  B. Geographical separation of divisional headquarters and central headquarters.
  C. The extent of freedom of decision making by many levels of management
  D. The relative size of the firm.
  C. The extent of freedom of decision making by many levels of management

  ---

  Explanation

  The primary distinction is in the degree of freedom of decision making by managers at many levels. In decentralization, decision making is at as low a level as possible. The premise is that the local manager can make more informed decisions than a centralized manager Centralization assumes decision making must be consolidated so that activities throughout the organization may be more effectively coordinated. In most organizations, a mixture of these approaches is best.

• Question 638:

  Industry structure and competition during the decline phase may result in intense and destructive competition. Which factor is most likely to contribute to this condition?

  A. Firms do not expect demand to rebound.
  B. The decline is rapid.
  C. Attractive substitutes are not available.
  D. Exit barriers are high.
  D. Exit barriers are high.

  ---

  Explanation

  High exit barriers may restrain firms from leaving the industry even though their returns are poor. i For example, specialized assets and inventory in a declining industry may have a low liquidation value. Few purchasers who wish to operate in the same industry may be available. Durable assets may have a carrying amount far greater than the liquidation value. Hence, liquidation may result in a loss that the firm may not wish to recognize. Furthermore, a low liquidation value means that the future discounted cash flows from remaining in the industry may exceed the opportunity cost of the capital invested in the declining industry. Thus, the returns from the proceeds of liquidation may be less than the returns from keeping those assets in the business, the fixed costs of exit (such as contract cancelation) 11may be high, the firm is part of a group executing a larger strategy, a government discourages exit to preserve employment, or managers have an emotional tie to the business.

• Question 639:

  Mobile Home Manufacturing, Inc. is evaluating a proposed acquisition of a new machine at a purchase price of $380,000 and installation charges that will amount to $20,000. A $15,000 increase in working capital will be required The machine will hate a useful life of four years, after which it can be sold for $50,000. The estimated annual incremental operating revenues and cash operating expenses are $750,000 and $500,000. respective, for each of the four years. Mobile Home's tax rate is 40%, and the cost of capital is 12%. Mobile Home uses straight-line depreciation for both financial reporting and income tax purposes. If Mobile Home accepts the project, the initial investment will be

  A. $350,000
  B. $365,000
  C. $385,000
  D. $415,000
  D. $415,000

  ---

  Explanation

• Question 640:

  Which one of the following statements concerning cash discounts is correct?

  A. The cost of not taking a 2/10, net 30 cash discount is usually less than the prime rate.
  B. With trade terms of 2/15, net 60, if the discount is not taken, the buyer receives 45 days of free credit.
  C. The cost of not taking the discount is higher for terms of 2/10, net 60 than for 2/10, net 30.
  D. The cost of not taking a cash discount is generally higher than the cost of a bank loan.
  D. The cost of not taking a cash discount is generally higher than the cost of a bank loan.

  ---

  Explanation

  Payments should be made within the discount periods if the cost of not taking discounts exceeds the firm's cost of capital. For example, failing to take a discount when terms are 2/10, net 30 means that the firm is paying an effective annual interest rate exceeding 36%. Thus, the cost of not taking a discount is usually higher than the cost of a bank loan.