In which of the following situations would medical payments be paid under an unendorsed PAP? A) injuries incurred while riding a motorcycle B) injuries incurred while an auto is being used without the presumption that permission would have been granted to use the auto C) injuries incurred in an auto while it is used in […]
The expected rate of return from an investment is equal to the expected cash flows divided by the initial investment. Indicate whether the statement is true or false ANSWER TRUE
Net income is the best measure to use for evaluating a firm’s profits on assets because it includes the effect of financing as well as the effect of operations. Indicate whether the statement is true or false ANSWER FALSE
When evaluating an investment project, which of the following best describes the financial information needed by the decision maker? A) pre-tax accounting profits adjusted for any accounting method changes B) incremental cash flows before taxes so the decision will not be biased by a tax code that may change in the future C) after-tax accounting […]
The present value of a single future sum of money is inversely related to both the number of years until payment is received and the discount rate. Indicate whether the statement is true or false ANSWER TRUE
A firm’s income statement reports the results from operating the business for a period of time, while the firm’s balance sheet provides a snapshot of the firm’s financial position at a specific point in time. Indicate whether the statement is true or false ANSWER TRUE
Actual returns are always less than expected returns because actual returns are determined at the end of the period and must be discounted back to present value. Indicate whether the statement is true or false ANSWER FALSE
The same underlying formula is used for computing both the future value and present value. Indicate whether the statement is true or false ANSWER TRUE
Operating profits or EBIT is used to measure a firm’s profits on assets because it does not include the firm’s cost of debt financing. Indicate whether the statement is true or false ANSWER TRUE
Accounting profits is the most relevant variable the financial manager uses to measure returns. Indicate whether the statement is true or false ANSWER FALSE
