The economic size-up involves: A) the relationship between overall economic activity and the industry’s performance assessment of the economy. B) identifying the current business cycle stage. C) anticipation of the interest rate change. D) All of the above. ANSWER D
Date: September 19th, 2020
All of the following are important factors in the economy EXCEPT: A) technology. B) interest rates. C) financial markets. D) credit conditions. ANSWER A
Date: September 19th, 2020
The interest rate on a line of credit is normally stated as a fixed rate-the prime rate. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The ________ method is a capital budgeting technique for evaluating projects of unequal lives. A) equivalent annual cost B) equal amortization C) straight-line annuity D) none of the above ANSWER A
Date: September 19th, 2020
Hurdle rates may change if: A) the cost of borrowing changes. B) the firm’s risk profile changes. C) the overall economic environment changes. D) All of the above. ANSWER D
Date: September 19th, 2020
Total leverage is concerned with the relationship between a firm’s sales revenue and its common stock earnings per share. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The business size-up involves: A) an external assessment of the industry. B) an external assessment of the economy. C) an internal assessment of the firm’s strengths and weaknesses. D) All of the above. ANSWER D
Date: September 19th, 2020
Self-liquidating loans are mainly invested in productive assets (i.e., fixed assets) which provide the mechanism through which the loan is repaid. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
If capital projects are ________ the NPV and IRR methods should result in ________ “accept” or “reject” decisions. If the projects are ________ this may no longer be the case. A) independent, inconsistent, mutually exclusive B) independent, consistent, mutually exclusive C) mutually exclusive, consistent, independent D) None of the above are true statements. […]
Date: September 19th, 2020
For a project to be accepted, the ________ may be greater than or less than the firm’s WACC, but the ________ must be greater than the hurdle rate. A) IRR; NPV B) hurdle rate; IRR C) MIRR; NPV D) NPV; IRR ANSWER B
Date: September 19th, 2020
