The IRR rule states that a firm should accept any project with an internal rate of return greater than or equal to a pre-specified hurdle rate. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
It would be a financially sound decision to pay employees once every two weeks rather than once a month. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
How might inflation restrict the usefulness of the balance sheet as normally presented? What will be an ideal response? ANSWER Inflation may significantly change the market value of assets and liabilities and be representative of actual values nor replacement costs.
Date: September 19th, 2020
An implicit assumption of the IRR method is that any cash inflows generated in the earlier years can be reinvested at the rate of the IRR. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
If a firm stretches its accounts payable, its cost of giving up a cash discount is increased. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Your new firm uses cash on hand to purchase $5,000 of inventory. The two accounting transactions are to ________ cash by $5,000 and to ________ inventory by $5,000. A) decrease; increase B) decrease; decrease C) increase; increase D) increase; decrease ANSWER A
Date: September 19th, 2020
What is free cash flow? Why is it important in the acquisition of a firm particularly a highly leveraged firm? What will be an ideal response? ANSWER Essentially, free cash flow are the funds available to pay all claimants on a firm. How much is available to meet the needs of creditors, and […]
Date: September 19th, 2020
A stock split has ________. A) little effect on a firm’s capital structure B) no effect on a firm’s capital structure C) a measurable effect on a firm’s capital structure D) a detrimental effect on a firm’s capital structure ANSWER B
Date: September 19th, 2020
________ represent current investor expectations about a firm whereas ________ are representations of historical costs. A) Book values; market values B) Market values; book values C) Regulators; investment bankers D) Common equity holders; bondholders ANSWER B
Date: September 19th, 2020
Accruals are liabilities for services received for which payment has yet to be made. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
