As of January 29, 2012, Home Depot had an outstanding fixed rate bond issue with a 5.875% coupon rate that was priced such that the before-tax yield to maturity was 4.67%. From this information we can conclude that the current price of the bond was less than the bond’s face value. Indicate whether the statement […]
Date: September 19th, 2020
Unlike the spontaneous sources of unsecured short-term financing, bank loans are negotiated and result from deliberate actions taken by the financial manager. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Total leverage can be defined as the potential use of fixed costs, both operating and financial, to magnify the effect of changes in sales on a firm’s earnings per share. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The two key external factors that impact the firm’s cash flows are: A) the overall economy and future financing needs. B) the overall economy and the nature and structure of the industry. C) the level of interest rates and working capital requirements. D) working capital requirements and growth projections. ANSWER B
Date: September 19th, 2020
The decision rule for the profitability index is that any project with ________ is an acceptable project. A) a ratio less than one B) a ratio greater than one C) a ratio greater than zero D) a ratio less than zero ANSWER B
Date: September 19th, 2020
For a capital project to be accepted, the ________ should exceed the ________. A) IRR; hurdle rate. B) NPV; hurdle rate C) MIRR; IRR D) MIRR; NPV ANSWER A
Date: September 19th, 2020
Generally, increases in leverage result in increased return and risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Self-liquidating loans are intended merely to carry a firm through seasonal peaks in financing needs that are due primarily to buildups of accounts receivable and inventory. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
________ are liabilities for services received for which payment has yet to be made. A) Notes payable B) Accruals C) Accounts payable D) Accounts receivable ANSWER B
Date: September 19th, 2020
Survey data indicates that the profitability index method of project evaluation is preferred to: A) NPV. B) IRR. C) MIRR. D) None of the above. ANSWER D
Date: September 19th, 2020
