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1. True or False Opportunity costs are irrelevant to the capital budgeting decision. False 2. True or False Accrual basis income and cash basis income are often different amounts. 3. True or False Building are classified into one of 8 class lives and depreciated by the MACRS tables. 4. True or False Equipment is classified into one of eight life categories and depreciated by formula. 5. True or False Some capital investments may require several years of outlays before they begin to generate cash inflows. 6. True or False Trend analysis is a form of sales forecasting where potential customers are studied. 7. True or False Competitive markets usually have identical products, and identical cost and one very large producer (with market power) 8. True or False An uninformed customer can be a source of competitive advantage and economic profits. 9. True or False A competitive advantage that last for a short period of time is more valuable than the same competitive advantage that is sustained for a long period of time. 10. True or False Growth without competitive advantage (and a negative NPV) can actually decrease the wealth of the firm. 11. True or False For some products an economic profit may be earned because the customers are less price sensitive (like medical services). 12. True or False Distribution can be a feature that companies use to differentiation their products to improve their chances of establishing a competitive advantage and earning economic profits. 13. True or False Arbitrage insures that equal cash flows (of equal risk) sell at equal rates of return and unequal cash flows (of equal risk) sell at equal prices once arbitrage has worked to adjust the prices. 14. True or False The NPV is a measure of risk not wealth. 15. True or False The current yield is a better measure to the long term investor than the yield to maturity. 16. True or False The major role played by earnings announcements in the valuation of a business (or project) is that earnings announcements are used to revise or refine your forecast of future cash flows. 17. True or False The difference between the yield to maturity and the yield to call is that yield to maturity is the presumed yield an investor will earn if they hold a bond until it is called. Yield to call is the presumed yield an investor will earn if they buy the bond at the current price and assume that it will be held to maturity. 18. True or False The reinvestment rate assumption is important to interpreting the IRR percentage. 19. True or False Ordinary annuities are common with leases and premiums paid to insurance companies because these cash flows usually occur at the beginning of the period. 20. True or False When companies have daily cash flows that occur over the year rather than at any single point in time, the analyst should use midyear cash flow discounting to approximate the daily cash flows. 21. True or False Assuming the same risk, the present value of $100 per year forever is greater than the present value of $100 the first year and growing a 4% forever thereafter. 22. True or False Internal rate of return is the preferred method to adjust for unequal lives. 23. True or False The net present value measures an investment's total contribution to shareholder wealth while the profitability index measures wealth creation per dollar invested. 24. True or False The investment with the highest equivalent annuity will have the highest net present value of total cash flows if all competing investments are repeated to infinity or to a comparable time horizon at which the lives of all competing investments end. 25. True or False XYZ Company is comparing a 10 year project with a 20 year project. When calculating an equivalent annuity for the project with a 10 year life, XYZ should calculate the present value of the project and divide this NPV by the annuity factor (PVIF) for 20 years. 26. True or False Failure to recognize potential increases in indirect costs will lead to an under-estimation of the projects profitability. 27. True or False All single amount problems involve finding either-- the present value, the future value, the rate of return, or the number of periods. 28. True or False Annuity dues are constant and consistent payments that occur at the beginning of the investment period. 29. True or False Businesses in highly competitive markets typically have a positive accounting profit and but not a positive economic profit. 30. True or False Competitive advantage is the elimination of some of the conditions for perfect competition so that economic profit is possible. 31. True or False Capital budgeting much like strategic planning begins with the establishing of goals. 32. True or False To continue delivering their missions, many non-profit organizations (while working for social causes) seek to maintain or increase wealth as if they were profit seeking businesses. 33. True or False It is uncommon for different stages of the value chain (from the purchase of raw materials, producing the product, to selling the product) to be performed in different part of the world. 34. True or False A payback period of 6 is better than a payback period of 4 35. True or False Sunk costs are associated with past expenditures and are therefore relevant to the capital budgeting decision. 36. True or False A profitability index of 1.4 is better than a profitability index of 1.6 (all other variables the same) 37. True or False An IRR of 14% is better than an IRR or 12% (all other variables the same)
What is the annual amount that Louis can spend while on his world tour if he will have no money left in the bank when he dies? This is assuming that Louis has a remaining life of 25 years and earns 9% on his savings.
The comparative balance sheet of Westmont Industries at December 31, 2007, reported the following, Create the statement of cash flows of Westmont Industries for the year ended 31, 2007,
Based on the information below, calculate the weighted average cost of capital.
If investors require a return equal to 6 percent to invest in similar bonds, what is the current market value of lightning's bond calculations.
1. Suppose you take out a margin loan for $60,000. The rate you pay is an 8.6 percent effective rate. If you repay the loan in six months, how much interest will you pay?
If the common shares are selling for $30 per share, the preferred share are selling for $15 per share, and the bonds are selling for 99 percent of par, what would be the weight used for equity in the computation of Team's WACC?
prestopino turns out 1500 batteries a day at a cost of 6 per battery for materials and labor. it takes the firm 22 days
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determine the discounted payback period in years for a project that costs 1000 and would yield after-tax cash flows of
write statement of purpose for international student who is willing to do master degree in human resource area. so
on a standard measure of hearing ability the mean is 300 and the standard deviation is 20. give the z scores for
you have 46298.02 in a brokerage account and you plan to deposit an additional 5500 at the end of every future year
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