Reference no: EM131932952

1. All of the below are goals of working capital management except:

to minimize the firm's accounts receivable

To maintain sufficient liquidity

To invest any cash balances safely and in sufficiently liquid form

To minimize the firm's cash conversion cycle

2. You invested $10800 and in 6 years it grew to $15000. What annual rate of return (APR) must you have earned. Assume annual compounding.

3. In anticipation of, but prior to, the introduction of a new product line, a feasibility study was contracted and paid for. The cost of this study should not be included in a capital budgeting analysis.

True

False

4. In making Capital Structure decisions, the overall objective is to:

minimize the total amount of dividends and interest the firm needs to pay

maximize the amount of financial leverage the firm can benefit from.

assure that a firm's WACC is similar to that of other companies in its industry.

minimize the firm's WACC

5. Depreciation Expense has no impact on the incremental cash flows related to any given project because it is a non-cash expense.

True

False

6. Adding more stocks to a portfolio reduces the systematic risk of the portfolio.

True

False

7. EBIT + depreciation - income tax expense + increases in NWC = cash flow from assets

True

False

8. While the payback period is not a measure based on the time value of money, a shorter payback period implies a less risky project (all else remaining the same).

True

False