Why might setting up production facilities abroad lead to expanded sales in local markets? What will be an ideal response? ANSWER Answer: When a firm such as a multinational produces abroad, it can more easily monitor market developments, adapt its products and production schedules, and provide more comprehensive after-sales services. Establishing local production […]
As the capital budgeting director for Chapel Hill Coffins Inc., you are evaluating construction of a new plant. The plant has a net cost of $5 million in Year 0 (today), and it will provide net cash inflows of $1 million at the end of Year 1, $1.5 million at the end of Year 2, […]
Given the following net cash flows, determine the IRR of the project: (to the nearest whole percent) Time Net Cash Flow 0 $1,520 1 -$1,000 2 -$1,500 3 $500 A) 36% B) 32% C) 28% D) 24% E) 20% ANSWER D
At an interest rate of 10% it will take approximately how many years to double your investment? A) Less than five years B) Between 7 and 8 years C) Between 9 and 10 years D) More than 10 years ANSWER B
In the economic field of agency theory, which one of the following is viewed as an agent with the principals who are most importantly the firm’s shareholders? A) suppliers B) employees C) managers D) attorneys ANSWER Answer: C
An annuity is A) a sum received in the future. B) a sum earned in the future but received now. C) a series of unequal payments. D) a series of equal payments. ANSWER D
Daniel’s Enterprises has a beta of 1.98 and a growth rate of 12 percent. The stock is currently selling for $12 a share. The overall stock market has an 11 percent rate of return and a risk premium of 8 percent. What is the expected rate of return on Daniel’s Enterprises stock? A) 10.00 percent […]
With an interest rate of 9%, $5,000 will grow to $10,000 in approximately A) 8 years. B) 4 years. C) 12 years. D) 24 years. ANSWER A
The main resources of the International Monetary Fund are provided by A) the members of the World Bank. B) its member countries primarily through payments of quotas. C) members of the Organization for Economic Cooperation and Development. D) the Bank for International Settlements. ANSWER Answer: B
In 1992, the European Union decided to create an economic as well as a monetary union involving the introduction of A) a pegged currency known as the euro. B) a managed currency know as the ecu. C) a freely floating exchange rate for a currency known as the euro. D) a single European currency managed […]
