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UNIVERSITY AT ALBANY
Rockefeller College of Public Affairs and Policy
PAD-501: Financial Management
Midterm Examination
Fall 2010
Your Name: ______________________________________________
Section (Circle One) Tuesday Wednesday
Turn off all cell phones during the exam
Directions:
1) You may use one page of notes. International students may also use a dictionary.
Place all other materials on the floor.
2) Print your initials at the top of each page.
3) You may use, but not share a calculator. Remember to clear your calculator
4) Show all your work. I can only give you partial credit if you show how you
approached the problem! For the time value of money computations show what
5) The points for each question are indicated in parentheses next to the question.
6) Look through the exam before you begin.
Good Luck.
SOLUTIONS
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SECTION ONE – SHORT ANSWERS
(4 points) 1. Select from the following to answer questions a to d. Note: some questions may
have multiple answers and answers may be used more than once.
i. Zero-Based
ii. Formula
iii. Cash
iv. Operating
v. Capital
vi. Flexible
(6 points) 3. As a courtesy, the Stratton County Parks Department (the Department) bills school
districts that use the parks. The table below is the operating budget for the Nature
tours at the Stratton Valley Golf Course. Individuals pay for tours the day they go on
them. School District 1 pays 50% of the amount billed the month after receiving the
bill and pays the remainder two months after receiving the bill. School District 2
pays 50% the month it is billed, 50% one month after receiving a bill. Prepare a cash
collections budget for the Nature Tour Operations for the month of June.
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(4 points) 4. Answer the following questions about real-estate mill-rate (tax-rate) calculations
for the Town of Westerlo.
a. (1 point) If the dollar value of uncollectible taxes goes down and nothing else
changes, the mill rate for the town will:
b. (3 points) If the total value of properties in Westerlo is $100,000,000 and the town
needs to raise $2,500,000 and expects to collect 90% of the amount it bills, what is
the total amount that the town needs to bill to its property holders to assure itself of
collecting $2.5 million? You may round your answer to the nearest dollar.
SOLUTION
(8 points) 5. Select from the following to answer questions a to c. Note: some questions may
have multiple answers and answers may be used more than once.
a. Fixed Cost
b. Direct Cost
c. Variable Cost
d. Indirect Cost
e. Marginal Cost
f. Step-Fixed Cost
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(6 points) 6. Answer the following questions about the time-value of money.
a. (2 point) At an interest rate of 0%, the present value today of $100 five years from
now will be (select from the answers below)
b. (2 point) If compounding changes from quarterly to weekly for a $100 investment
earning 8% per annum, the future value at the end of five years will: (select from the
answers below)
a. Increase
(6 points) 7. Albany County registered a $50,000,000 20 year bond that pays interest every six
months and an annual coupon rate of 3.3%. During the registration period market
interest rates declined to 3.2%. How much will Albany County receive when it sells
the bond?
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(6 points) 8. Housing the Homeless (HH) offers three types of services – homeless outreach,
temporary housing and a soup kitchen. The average weekly mix of services delivered,
as well as the marginal costs and revenues from those services are shown in the table
below.
a. (4 points) What is HH’s overall contribution margin per person served?
b. (2 points) If HH serves 2,400 people per week, fixed costs are $15,000 per
week and they receive donations that average $12,000 per week, do they
currently break even on their operations? Support your answer with the
appropriate calculations.
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