The use of a dollar breakeven point is important when a firm has more than one product, especially when each product is selling at a different price. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following actions could INCREASE a firm’s working capital gap? A) reduce the age of inventory B) increase the age of accounts payable C) increase the age of accounts receivable D) All actions listed would increase a firm’s working capital gap. ANSWER C
Date: September 19th, 2020
A firm has three independent projects under consideration each with a required rate of return of 10%/ The total projects budget is only $2,000. Project X has an initial investment of $2,000 and a single cash flow in year one of $2,360. Project Y has an initial investment of $1,000 and a single cash flow […]
Date: September 19th, 2020
Modigliani and Miller each won a Nobel prize in economics in at least in part because of their work with capital structure. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
There are no adequate methods for comparing projects of unequal lives. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
According to data assembled for U.S. firms, the average level of debt as a percentage of capital is approximately equal across industries. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Ultimately, when faced with capital rationing, firms should choose the combination of capital projects that maximizes the NPV subject to the capital constraints. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is NOT a question related to the analysis of the overall economy? A) What is the current business cycle stage? B) How profitable is the industry cycle? C) How important are interest rates in the financial position of the firm within the industry? D) How easy is it to obtain debt […]
Date: September 19th, 2020
An increase in cost (fixed cost or variable cost) tends to increase the operating breakeven point, whereas an increase in the sales price per unit will decrease the operating breakeven point. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A leveraged buyout (LBO) is when we tend to find firms at their lowest debt levels. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
