Profitability index of a capital-budgeting proposal

Assignment Help Finance Basics
Reference no: EM13788753

1.Which of the following is true regarding Investment Banks?

2. We compute the profitability index of a capital-budgeting proposal by Initial outlay = $1,748.80

3. Project Sigma requires an investment of $1 million and has a NPV of $10. Project Delta requires an investment of $500,000 and has a NPV of $150,000. The projects involve unrelated new product lines. What is your evaluation of these two projects?

4. Which of the following is most likely to occur if a firm over-invests in net working capital?

5. The Securities Investor Protection Corporation protects individuals from

6. If managers are making decisions to maximize shareholder wealth, then they are primarily concerned with making decisions that should:

7. Buying and selling in more than one market to make a riskless profit is called:

8. Given an accounts receivable turnover of 8 and annual credit sales of $362,000, the average collection period (360-day year) is

9. Delta Inc. is considering the purchase of a new machine which is expected to increase sales by $10,000 in addition to increasing non-depreciation expenses by $3,000 annually. Due to the sales increase, Delta expects its working capital to increase $1,000 during the life of the project. Delta will depreciate the machine using the straight-line method over the project's five year life to a salvage value of zero. The machine's purchase price is $20,000. The firm has a marginal tax rate of 34 percent, and its required rate of return is 12 percent. The machine's initial cash outflow is:

10. A company collects 60% of its sales during the month of the sale, 30% one month after the sale, and 10% two months after the sale. The company expects sales of $10,000 in August, $20,000 in September, $30,000 in October, and $40,000 in November. How much money is expected to be collected in October?

11. Capital Structure Theory in general assumes that:

12. Which of the following best describes why cash flows are utilized rather than accounting profits when evaluating capital projects?

13. Which of the following could offset the higher risk exposure a company would face if it's current ratio and net working capital were relatively low?

14. When the impact of taxes is considered, as the firm takes on more debt

15. Accounting break-even analysis solves for the level of sales that will result in:

16. When calculating the weighted average cost of capital, which of the following has to be adjusted for taxes?

17. Which of the following statements best represents what finance is about?

18. Apple Two Enterprises expects to generate sales of $5,950,000 for fiscal 2014; sales were$3,450,000 in fiscal 2013. Assume the following figures for the fiscal year ending 2013: cash $70,000; accounts receivable $250,000; inventory $400,000; net fixed assets $520,000; accounts payable $235,000; and accruals $155,000. Use the percent-of-sales method to forecast cash for the fiscal year ending 2014.

19. Aspects of demand risk controllable by the firm include:

20. The Oviedo Thespians are planning to present performances of their Florida Revue on 2 consecutive nights in January. It will cost them $5,000 per night for theater rental, event insurance and professional musicians. The theater will also take 10% of gross ticket sales. How many tickets must they sell at $10.00 per ticket to raise $1,000 for their organization?

21. Which of the following goals is in the best long-term interest of stockholders?

22. Compute the payback period for a project with the following cash flows, if the company's discount rate is 12%.

23. If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of five years?

24. Which of the following best describes why cash flows are utilized rather than accounting profits when evaluating capital projects?

25. Which of the following financial ratios is the best measure of the operating effectiveness of a firm's management?

26. Which of the following is not part of the underwriting process?

27. Long-term financial plans typically encompass:

28. Metals Corp. has $2,575,000 of debt, $550,000 of preferred stock, and $18,125,000 of common equity. Metals Corp.'s after-tax cost of debt is 5.25%, preferred stock has a cost of 6.35%, and newly issued common stock has a cost of 14.05%. What is Metals Corp.'s weighted average cost of capital?

29. You just purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment, how much will you sell the land for in 10 years?

30. Which of the following is true about bonds?

Reference no: EM13788753

Questions Cloud

How important support systems for students with disabilities : How important are support systems for students with disabilities? How important are they for the special education teachers?
Describe targeted student with areas of academic strengths : A brief description of the targeted student with a disability: (a) Age and grade level of student, (b) Areas of academic strengths/weaknesses, (c) Student's preferred modalities of learning.
Focus diseases of healthy people 2010 : Is obesity a disease? Do you believe that it should be classified as a chronic disease? Why or why not?
How would the implementation of community policing : Within the Discussion Board area, write 400-600 words that respond to the following questions with your thoughts, ideas, and comments. How would the implementation of community policing differ in the following communities
Profitability index of a capital-budgeting proposal : 1.Which of the following is true regarding Investment Banks? 2. We compute the profitability index of a capital-budgeting proposal by Initial outlay = $1,748.80
The importance of developing an individualized service plan : describe the procedure and process a case manager should take when completing formal referrals - Heather, the importance of developing an individualized service plan
Short notes on peripheral vascular disease : peripheral vascular disease
Definition of an early childhood professional : Reflect on Morrison's definition of an early childhood professional and consider what it means to be an early childhood professional and the roles you are expected to fulfill. How do you feel about this view of a professional and about being an ad..
Health beliefs affects on spread of emerging diseases : How or why do individuals from different cultures manifest some diseases in dissimilar ways?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd