ACC501 Midterm Past Paper Fall 2006

MIDTERM EXAMINATION

FALL 2006 ACC501 - BUSINESS FINANCE (Session - 3 ) Marks: 40 Time: 60min

Student Name: Center Name/Code: Exam Date: Wednesday, December 06, 2006

• All questions are compulsory.
• This exam consists of 10 Multiple Choice Questions (MCQ’s), 5 Fill in the Blanks, 5 Short Questions and 1 Numerical Question.
• You should try to complete MCQ’s in 10 - 15 minutes in order to avail 75 - 80 minutes for the Numerical question.
• For each MCQ, read the choices available carefully and select the choice which you consider is the most suitable, by clicking on the appropriate circle.
• Save your answer before proceeding to the next question.
• Do not click the “Finish button” while solving your paper. Once you clicked the “Finish” button, you will not be able to access your paper again. Click it only at the end after attempting the whole paper, which will be an indication that you have submitted your complete paper.
• You are required to show all the working of short questions as well as numerical question in your answers.
• The use of calculator and financial tables is allowed.
• A clock has been given in the exam software. Software will automatically be closed after 90 minutes.
• It is your responsibility to manage time and responses to test questions effectively.
• Failure to comply with the supervisor’s directions will result in your test being cancelled. Please comply with supervisor’s directions to avoid any unpleasant event.

Question Question Marks Question Marks

Q1. A major disadvantage of the corporate form of organization is the ______________. (1 marks)

Inability of the firm to raise large sums of additional capital

Double taxation of dividends Limited liability of shareholders Limited life of the corporate firm

Q2. Which one of the following current asset is not treated as a cash flow from operating activities? (1 marks)

Trade receivable Cash and cash equivalent

Inventory

Short term investment

Q3. Suppose you can earn a 7.2 percent interest rate per year. According to the rule of 72, it will take approximately ___________ years to double your money. (1 marks)

5. 00
6. 20
7. 00
8. 0

Q4. Rahim Corporation has a cash coverage ratio of 7 times. It’s earning before interest and tax is Rs.900 million. It has total assets of Rs.3 billion. The company has a policy of charging 5 % annual depreciation. By using the above information, what would be the interest expense for the year? (1 marks)

90 million

120 million

140 million

150 million

Q5. Suppose ZM Corporation has a debt to equity ratio of 1.50 times. It has the return on assets of 14%. The return on equity would be ____________. (1 marks)

1. 25%