Due to its secondary position relative to equity, suppliers of debt capital face greater risk and therefore must be compensated with higher expected returns than suppliers of equity capital. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
To be considered acceptable, a project must have an NPV greater than 1.0. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: To be considered acceptable, a project must have an NPV greater than $0.0
Date: September 19th, 2020
Meyer, Inc. is considering a five-year project that has an initial after-tax outlay or after-tax cost of $70,000. The future after-tax cash inflows from its project for years 1, 2, 3, 4 and 5 are all the same at $35,000. Meyer uses the net present value method and has a discount rate of 10%. Will […]
Date: September 19th, 2020
The ownership structures of most publicly traded U.S. nonfinancial firms is better characterized by the term: a. closely held b. diffuse ANSWER B
Date: September 19th, 2020
Collateral is typically required for a ________. A) secured short-term loan B) line of credit C) short-term, self-liquidating loan D) single-payment note ANSWER A
Date: September 19th, 2020
The relative inexpensiveness of debt capital is due to the fact that the lenders take the least risk among the long-term contributors of capital. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm’s capital structure is the mix of short-term liabilities and long-term debt. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Stanton, Inc. wants to analyze the NPV profile for a five-year project that is considered to be very risky. The project’s initial outlay or cost is $80,000 and it has respective cash inflows for years 1, 2, 3, 4 and 5 of $15,000, $25,000, $35,000, $45,000 and $55,000. Stanton wants to know how the NPV […]
Date: September 19th, 2020
According to the composite sources-and-uses data presented in Chapter 1, the main net source of funds for U.S. nonfinancial firms over the years 1980-2000 is: a. proceeds from debt offerings. b. proceeds from equity offerings. c. retained earnings (net cash flow from operations). d. sales of investments (net of increases in investments). ANSWER […]
Date: September 19th, 2020
Ace, Inc. is considering Project A and Project B, which are two mutually exclusive projects with unequal lives. Project A is an eight-year project that has an initial outlay or cost of $18,000. Its future cash inflows for years 1 through 8 are the same at $3,800. Project B is a six-year project that has […]
Date: September 19th, 2020
