What is the optimal capital structure? A) The capital structure that frees up the most cash flow B) The capital structure that makes management the most money C) The capital structure that produces the highest firm value D) The capital structure that keeps the most control within the company ANSWER C
Date: September 19th, 2020
Giant Koala Stores Inc has forecasted sales for July and August in the top row of the table. Giant Koala makes 85% of its sales for cash and the remainder on credit. The credit sales are collected one month after the sale. What are Giant Koala’s forecasted total cash inflows in August? Sales Forecast and […]
Date: September 19th, 2020
An annuity contract will pay you $4,000 a year (end of year) for the next three years. Or, you can choose to receive $12,610 at the end of the third. Assuming that you can earn 8% on investments, you should A) choose to receive the $4,000 annuity payments. B) choose to receive the $12,610 payment. […]
Date: September 19th, 2020
What is the Profitability Index of the Airbus A380 project? The Airbus A380 is the largest civilian aircraft ever built. It can carry 555 passengers on two decks. Initial project investments were $13B. Assume that the initial investment was paid on Dec 31, 2008. Assume that Airbus will produce 60 aircraft per year for five […]
Date: September 19th, 2020
The market risk premium: A) varies over time as both the risk-free rate of return and the market rate of return vary. B) plus the risk-free rate of return equals the cost of capital for any firm with a beta of zero. C) is equal to one percent for a risk-free asset. D) is equal […]
Date: September 19th, 2020
Which of the following is NOT a conclusion drawn from M&M’s Propositions 1 and 2? A) Firm value is determined by the left hand of the balance sheet, the firm’s assets, and the cash flow generated by them. B) A firm can change its market value by splitting its cash flows into different streams. C) […]
Date: September 19th, 2020
Which item below is not associated with goal planning? A) Constructing a budget B) Adjusting for inflation C) Making goals concrete D) Determining a savings schedule ANSWER A
Date: September 19th, 2020
The major advantage provided by the profitability index is it: A) eliminates the need to estimate the firm’s cost of capital. B) reduces the forecast error of cash flow estimates. C) provides a better measure of the effects of a project on shareholder wealth than NPV. D) is useful as an aid in raking projects […]
Date: September 19th, 2020
Generally speaking, planners can usually seek higher return investments to meet A) short-term goals. B) long-term goals. C) goals of any term. D) dreams, but not goals. ANSWER B
Date: September 19th, 2020
What is the Profitability Index of the Boeing 787 Dreamliner project? The Boeing 787-8 can carry 230 passengers up to 8,200 nautical miles at a cruising speed of mach 0.85. The Dreamliner is more comfortable for passengers because of higher cabin humidity. Boeing completed construction its assembly plant in Everett Washington in December 2007 at […]
Date: September 19th, 2020
