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
________ occurs when a firm puts a limit on the amount of its investments. A) Capital structure B) Capital rationing C) Working capital management D) Marginal structure ANSWER B
Date: September 19th, 2020
Hurdle rates depend on the perceived riskiness of divisions or projects and are used to evaluate different types of potential investments. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm’s capital structure is the mix of the current liabilities, long-term debt, and equity maintained by the firm. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Both operating and financial leverage result in the magnification of return as well as risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A line of credit is an agreement between a commercial bank and a business, specifying the amount of unsecured short-term borrowing the bank will make available to the firm over a given period of time. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Operating change restrictions are contractual restrictions that a bank may impose on a firm as part of a line of credit agreement. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The overall goal in sizing up each of the external and internal factors is to: A) determine the competitive position of the firm relative to its competitors. B) increase the value of the enterprise. C) assess the company’s strengths and weaknesses. D) make better investment decisions. ANSWER B
Date: September 19th, 2020
Identify methods that firms use to establish hurdle rates for capital projects. What will be an ideal response? ANSWER Firms use many techniques to establish hurdle rates. First, if they have multiple and distinct business divisions, they may use industry averages for that type of business. Or, they may have historical reference points […]
Date: September 19th, 2020
The left side of the balance sheet should represent investments made by the firm and the right side should represent the sources of financing. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
