Ali borrowed SAR 100,000 today that he must repay in 15 annual end-of-year installments of $10,000. What annual interest rate is Ali paying on his loan?

a. 8.02%

b. 5.56%

c. 6.04%

d. 3.33%

Saudi Construction Company has earned a return on capital invested of 9% for the past two years, but an investment analyst reviewing the company has stated the company is not creating shareholder value. This may be due to the fact that ________.

a. the coupon rate on bonds is 8%

b. the return on assets is 12%

c. the investors' required rate of return is 11%

d. the investors' required rate of return is 8%

You decide to borrow SAR 800,000 to build a new home. The bank charges an annual interest rate of 5% and requires a payment at the end of each year. If you pay back the loan over 30 years, your annual payments would be closest to ________.

a. SAR 61,815

b. SAR 45,722

c. SAR 47,544

d. SAR 52,041

If you put SAR 100,000 in an investment that returns eight percent compounded semi-annually, what would you have after five years?

a. SAR 148,024

b. SAR 146,932

c. SAR 215,892

d. SAR 144,926

Saudi Manufacturing makes air conditioners. The company pays annual rent of SAR 500,000 per year and pays administrative salaries totaling SAR 150,000 per year. Each air conditioner requires SAR 400 of materials, ten hours of labor at SAR 60 per hour, and variable overhead costs of SAR 100. Fixed advertising expenses equal SAR 200,000 per year. Each air conditioner sells for SAR 3,700. What is Yanbu's break-even output level?

a. 415

b. 289

c. 344

d. 327

Assume that you have SAR 350,000 invested in a stock that is returning 12.50%, SAR 250,000 invested in a stock that is returning 14.75%, and SAR 400,000 invested in a stock that is returning 20.25%. What is the expected return of your portfolio?

a. 17.21%

b. 14.95%

c. 15.22%

d. 16.16%

Discuss the time value of money and the impact of interest rates on valuation.

Analyze and evaluate capital budgeting and capital structure considerations to identify financing options and investment opportunities to achieve organizational objectives.

Apply the primary elements of the corporate investment decision based on evaluation of risk

and return and opportunity costs.

Apply the core principles of value-based financial management.

Describe current assets and liabilities, working capital, and credit management activities related to organizational performance.

What is the difference between systematic risk and unsystematic risk.

What is the agency problem, and how might it impact the goal of maximization of shareholder

wealth.

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