Reflected in cash budget of firm that is in zero tax bracket

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Reference no: EM131918677

1. Which of the following is NOT directly reflected in the cash budget of a firm that is in the zero tax bracket?

a. Repurchases of common stock.

b. Writing off bad debts.

c. Payment lags.

d. Cumulative cash.

e. Payment for plant construction.

2. A basic rule in capital budgeting is that if a project's NPV exceeds its IRR, then the project should be accepted.

a. True

b. False

3. Roton Inc. purchases merchandise on terms of 2/15, net 40, and its gross purchases (i.e., purchases before taking off the discount) are $675,000 per year. What is the maximum dollar amount of costly trade credit the firm could get, assuming it abides by the supplier's credit terms? (Assume a 365-day year.)

a. $38,965

b. $51,198

c. $45,308

d. $41,684

e. $48,027

Reference no: EM131918677

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