________ costs each year do not reflect cash flow because the actual purchase and installation (outflow of dollars) of the asset have already taken place. A) Depreciation B) Sunk C) Opportunity D) Working Capital ANSWER Answer: A
Date: September 19th, 2020
A firm is considering purchasing an asset that will cost $5 million. Other depreciable costs include $800,000 in installation costs. If the asset is classified in the 5-year class, what is the annual depreciation for years 1, 3, and 6 for this asset, using the fixed depreciation percentages given by MACRS? (The percentages are 20.00%, […]
Date: September 19th, 2020
Short-term financial management is concerned with management of a firm’s current assets and current liabilities to achieve a balance between profitability and risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following was NOT mentioned by Akerlof to mitigate the lemons problem? a. certification b. using a costly signal c. private negotiation d. establishing a reputation e. contract enforcement ANSWER C
Date: September 19th, 2020
A firm is considering purchasing an asset that will cost $1 million. Other depreciable costs include $100,000 in installation costs. If the asset is classified in the 3-year class, what is the annual depreciation for each year for this asset using the fixed depreciation percentages given by MACRS? (The percentages are 33.33%, 44.45%, 14.81%, and […]
Date: September 19th, 2020
Firms are able to reduce financing costs or increase the funds available for expansion by maximizing the amount of funds tied up in working capital. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The advantage of straight-line depreciation over MACRS depreciation is that you can write off ________. A) more of your total capital costs B) your capital costs in fewer years C) a larger percentage of your capital costs earlier D) None of the above ANSWER Answer: D
Date: September 19th, 2020
A firm is considering purchasing two assets. Asset L will have a useful life of 20 years and cost $5 million; it will have installation costs of $1 million but no salvage or residual value. Asset S will have a useful life of 8 years and cost $2 million; it will have installation costs of […]
Date: September 19th, 2020
Pecking order is a hierarchy of financing beginning with retained earnings, followed by debt financing, and finally external equity financing. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A field warehouse is ________. A) a warehouse outside the metropolitan area B) a warehouse on the borrower’s premises C) a central warehouse storing the merchandise of several businesses D) a warehouse located near the lender ANSWER B
Date: September 19th, 2020
