The net present value of an investment is ________. A) the present value of all benefits (cash inflows) B) the present value of all benefits (cash inflows) minus the present value of all costs (cash outflows) of the project C) the present value of all costs (cash outflows) of the project D) the present value […]
Date: September 19th, 2020
Consider the following four-year project. The initial outlay or cost is $180,000. The respective cash inflows for years 1, 2, 3 and 4 are: $100,000, $80,000, $80,000 and $20,000. What is the discounted payback period if the discount rate is 11%? A) About 1.667 years B) About 2.000 years C) About 2.135 years D) About […]
Date: September 19th, 2020
Acme, Inc. is considering a four-year project that has initial outlay or cost of $100,000. The respective cash inflows for years 1, 2, 3 and 4 are: $50,000, $40,000, $30,000 and $20,000. Acme uses the discounted payback period method, and has a discount rate of 11.50%. Will Acme accept the project if it’s payback period […]
Date: September 19th, 2020
________ leverage is concerned with the relationship between sales revenue and earnings per share. A) Financial B) Operating C) Variable D) Total ANSWER D
Date: September 19th, 2020
The pledging cost of accounts receivable is normally 2 to 5 percent above the prime rate. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Identify and describe the shortcomings of the payback period model or method (without discounting). What will be an ideal response? ANSWER Answer: The payback period method ignores cash inflows after the initial outflow has been recovered. Thus, this method is biased toward those projects that have higher cash inflows in earlier years and […]
Date: September 19th, 2020
What average annual proportion of the total number of public U.S. nonfinancial firms at year-end 1980 exited over the years 1981-2000 (i.e., the average attrition rate)? a. 5.9% b. 15.9% c. 25.9% d. 35.9% ANSWER A
Date: September 19th, 2020
Which category of liabilities & equities had the smallest proportion in every year from 1980- 2000? a. current liabilities b. debt c. other non-current liabilities d. common stock e. preferred stock ANSWER E
Date: September 19th, 2020
Acme, Inc. is considering a four-year project that has an initial outlay or cost of $80,000. The respective future cash inflows for years 1, 2, 3 and 4 are: $40,000, $40,000, $30,000 and $30,000. Acme uses the discounted payback period method and has a discount rate of 12%. Will Acme accept the project if it’s […]
Date: September 19th, 2020
Factoring accounts receivable is relatively an expensive source of unsecured short-term funds. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
