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1.

XPM Ltd already has branches in Melbourne and Sydney; and is considering a new expansion project that entails opening a new branch in Brisbane. XPM expects that the expansion project will involve transfer of five employees from the Sydney branch and will involve a relocation expense of $5000 per employee. The relocation expense will be covered by XPM. Given this scenario, please state whether the following statement is True or False:

The employees' relocation expenses will be considered in the expansion project's evaluation.

2.

For a particular production project, the financial analyst estimates the expected unit sales, the expected unit price and the expected unit variable cost. Based on these estimations, the analyst determines that the expected NPV of the project is $100,000. To understand the risk associated with the project, the analyst further conducts the following analysis: The analyst assumes that values for the expected unit sales, the expected unit price and the expected unit variable cost can be represented by statistical distributions. With such assumption, the analyst uses a computer program to generate 10000 scenarios and estimates the distribution of free cash flows over these 10000 scenarios for each year of the project. This analysis, which involves large number of scenarios and the use of a computer program, is known as:

a - decision tree analysis

b - sensitivity analysis

c - scenario analysis

d - simulation analysis

is the answer a,b,c or d?

3.

The proportions of debt and equity used to determine the weighted average cost of capital for the company is based on the market value of debt and equity outstanding. True or False?

4.

When analysing a company's cost of debt, we are typically interested in:

a - the cost of the debt on the date that the analysis is being completed.

b - the coupon rate on the company's bonds.

c - . the risk-free rate plus half a percent.

d - none of the above.

is the answer a,b,c or d?

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