A terminal warehouse is ________. A) a warehouse located beyond city limits for storing the merchandise B) a warehouse on the borrower’s premises to store the merchandise C) a central warehouse storing the merchandise of various customers D) a warehouse located near the lender’s home for storing the merchandise ANSWER C
Which of the methods below is a way to allocate depreciation? A) The allocation each year is the amount of cost as determined by the actual estimated usage for that year. B) Use the government-mandated accelerated depreciation system, which depreciates the capital asset at the minimum accelerated amount allowed each year. C) The allocation each […]
As Akerlof argues, sellers who have a lemon, of course, know they have lemon but are not willing to tell the truth about the condition of their auto and, for the short selling period involved, can put their auto in a satisfactory condition that approximates the normal condition of the auto that are not lemons. […]
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 […]
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
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
Appropriate collateral for a loan secured under a trust receipt inventory loan is ________. A) drill bits B) pencils C) vehicles D) bolts ANSWER C
If four plus five equals ten, that’s synergy. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Because of the extensive research conducted in recent years in the area of capital structure theory, it is now possible for financial managers to pinpoint with great accuracy a firm’s optimal capital structure. Indicate whether the statement is true or false ANSWER FALSE
Erosion is the additional cash generated by a new project beyond the current cash flow with the addition of a specific new project. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: INCREMENTAL CASH FLOW is the additional cash generated by a new project beyond the current cash flow with […]
