GB519 Management Level Control Unit 6 Final Exam

QUESTION

1.Omaha Plating Corporation is considering purchasing a machine for $1,500,000. The machine will generate a constant after-tax income of $100,000 per year for 15 years. The firm will use straight-line (SL) depreciation for the new machine over 10 years with no residual value. What is the payback period for the new machine, under the assumption that cash inflows occur evenly throughout the year? (Points : 2)
4 years. 5 years. 6 years. 10 years. 15 years.

2.In making capital budgeting decisions, the principal focus is on: (Points : 2)
Cash flows only. Timing of the cash flows only. Cash flows and the timing of the cash flows. Accounting-based measures of revenues and expenses. Nonfinancial performance indicators.

3.The excess of the present value of future cash flows over the initial investment outlay for a project is the: (Points : 2)
Internal rate of return (IRR) of the project. Modified internal rate of return (MIRR) on the project. Book (accounting) rate of return for the project. Net present value (NPV) of the project. Modified internal rate of return (MIRR) of the project.

4.Done on a regular basis, relevant cost pricing in special order decisions can erode normal pricing policies and lead to: (Points : 2)
Overconfidence in decision-making. A loss in the firms profitability. Conflicting goals between management and sales personnel. A cost leadership strategy. Maximization of resources.

5.Which one of the following is most descriptive of strategic analysis? (Points : 2)
Quantitative. Customer focus. Short-term focus. Individual product focus. Not linked to the firms strategy.

ANSWER:

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