Which of the following is NOT a reason why banks are more willing to lend to some firms than to others? A) Banks prefer to lend to firms with more stable cash flows. B) Banks prefer to lend to firms with more physical as opposed to intellectual assets. C) Banks prefer to lend to firms […]
Date: September 19th, 2020
Any project with a profitability index below 1.0 should be accepted as this implies that the benefits exceed the costs. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Ending cash = Sources of cash – Uses of cash + beginning cash balance Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The dollar breakeven sales level can be solved for by dividing fixed costs by the dollar contribution margin. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Managers wishing to add value to the firm can do this by adding projects with a ________ net present value. A) positive B) negative C) zero D) none of the above ANSWER A
Date: September 19th, 2020
The prime rate of interest fluctuates with changing supply-and-demand relationships for short-term funds. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
________ refers to the difficulties experienced by firms as they attempt to meet financial commitments to their creditors. A) Financial distress B) Capital structure C) Capital budgeting D) Working capital management ANSWER A
Date: September 19th, 2020
The practice of extending credit to customers is known as: A) float. B) trade credit. C) forfaiting. D) discounting. ANSWER B
Date: September 19th, 2020
What are the two most popular forms of capital budgeting decision rules in practice? A) IRR and payback period B) profitability index and payback period C) IRR and NPV D) NPV and profitability index ANSWER C
Date: September 19th, 2020
A discount loan is a loan on which interest is paid in advance by deducting it from the loan so that the borrower actually receives less money than is requested. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
