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
A fixed-rate loan is a loan whose rate of interest is established at a fixed increment above the prime rate and is allowed to vary above the prime rate only when the prime rate varies until maturity. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The overall goal in sizing up each external and internal factor is to increase the value of the firm. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Although more expensive than a line of credit, a revolving credit agreement can be less risky from the borrower’s viewpoint. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The brew master at Appalachian Ale has asked you to help choose between two alternatives for a plant expansion. The first choice is a new brew system that costs $180,000 with annual maintenance costs of $17,000, an expected life of 15 years and a required rate of return of 12%. the alternative brew system costs […]
Date: September 19th, 2020
The shape of the yield curve is important for which of the following reasons? A) It provides an indication of the anticipated change in interest rates. B) It provides an indication of the borrowing costs for corporation. C) It provides clues about the economy’s current position in the business cycle. D) All of the above. […]
Date: September 19th, 2020
