User Account

All Pages

Show the investment ranking methods

Assignment Help Accounting Basics
Reference no: EM13328689

Part -1:

Question 1. Which of the following is true regarding the evaluation of projects? 
sunk costs should be included
erosion effects should be considered
financing costs need to be included
opportunity costs are irrelevant

Question 2. Which of the following investment ranking methods does not consider the time value of money? 
net present value method
payback method
internal rate of return method
all of these are time-adjusted methods

Question 3. You can ensure that an investment is expected to create value for 
have a PI equal to zero.
produce negative rates of return.
have positive AARs.
have positive IRRs.
have positive NPVs.

Question 4. What is the net present value of a project with the following cash flows, if the discount rate is 10 percent

 

Year

0

1

2

3

4

Cash flow

-$32,000

$9,000

$10,000

$15,200

$7,800


$1,085.25
$1,193.77
$3,498.28
$4,102.86
$4,513.15

Question 5. Howard Company is considering a new project that will require an initial cash investment of $575,000. The project will produce no cash flows for the first three years. The projected cash flows for years 4 through 8 are $73,000, $112,000, $124,000, $136,000, and $145,000, respectively. How long will it take the firm to recover its initial investment in this project? 
5.81 years
6.05 years
6.96 years
7.90 years
This project never pays back

Question 6. The postponement of a project until conditions are more favorable: 
is a valuable option.
is referred to as the option to extend.
could not cause a negative net present value project to become a positive net present value project.
will generally cause the internal rate of return for a project to decline.

Question 7. ___________, occurs when a firm cannot raise financing for a project under any circumstances. 
contingency planning.
hard rationing.
soft rationing.
capital constraint.
scenario analysis.

Question 8. ABC Cameras is considering an investment that will have a cost of $10,000 and the following cash flows: $6,000 in year 1, $4,000 in year 2 and $3,000 in year 3. Assume the cost of capital is 10%. Which of the following is true regarding this investment? 
The net present value of the project is approximately $1,011
This project should be accepted because it has a negative net present value
This project s payback period is 10 years or more
All of the above are true

Question 9. Assume Company X plans to invest $60,000 in industrial equipment. Using Tables 9.6 and 9.7 of your textbook (Page 277), which is the first year depreciation amount under MACRS? 
$12,000
$8,574
$19,800
None of the above

Question 10. Assume a corporation has earnings before depreciation, and taxes of $100,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company? 
$82,000
$110,000
$42,000
none of these

Question 11. Which of the following statements is true regarding systematic risk? 
is diversifiable
is the total risk associated with surprise events
it is measured by beta
it is measured by standard deviation

Question 12. Which statement is true regarding risk? 
the expected return is usually the same as the actual return
a key to assess risk is determining how much risk an investment adds to a portfolio
risks can always be decreased or mitigated by the financial manager
the higher the risk, the lower the return investors require for the investment

Question 13. The stock of Chocolate Galore is expected to produce the following returns, given the various states of the economy. What is the expected return on this stock?

State of Economy

Probability of State of Economy

Rate of Return

Recession

.02

-.06

Normal

.88

.11

Boom

.10

.17


7.33 percent
9.82 percent
11.26 percent
11.33 percent
11.50 percent

Question 14. You own a portfolio that consists of $8,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of stock D?
17.68 percent
17.91 percent
18.42 percent
19.07 percent
19.46 percent

Question 15. You currently own a portfolio valued at $24,000 that has a beta of 1.1. You have another $8,000 to invest, and would like to invest it in a manner such that the risk of the new portfolio matches that of the overall market. What does the beta of the new security have to be? 
.46
.55
.61
.70
.90

Reference no: EM13328689

Questions Cloud

Write payoff table and find pure-strategy nash equilibria : Each of us will get pleasure worth a 3 from her success (no matter n'ho helps her). But each one who goes to help will bear a cost of1, this being the r-alue of our time taken up in helping. set this up as a game.
Explain what mass of baso4 will dissolve in water : The Ksp of BaSO4 is is 1.1 x 10^-10 at 25 degrees C. What mass of BaSO4 (molar mass = 233.4 g/mol) will dissolve in 1.0 L of water at 25 degrees C
Find the net force acting on the object : Consider two forces exerted on a 65kg object: one 200. N acting at 25 degrees and another of 100. N acting at 45 degrees. find the net force acting on the object
Determine what is the present value at a discount rate : What is the present value of $2,150 per year, at a discount rate of 9 percent, if the first payment is received 6 years from now and the last payment is received 20 years from now
Show the investment ranking methods : Which of the following investment ranking methods does not consider the time value of money and regarding the evaluation of projects?
Determine the standard reduction potentials : Find the standard reduction potentials for the following half reactions in acidic solution. E° for MnO4 (aq) + 8 H+ (aq) + 5e^- -> Mn^2+ (aq) + 4 H2O (I)
By what percent does the volume change : Some thermometers indicate temperature by means of the thermal expansion of alcohol. by what percent does the volume change if the temperature changes by 9 F
Determine what is jms cost of capital for the firm : The target capital structure for JM is 53% common stock, 16% preferred stock, and 31% debt. If the cost of common equity for the firm is 19.1, the cost of preferred stock is 12.8%, and the before-tax cost of debt is 10.2%,
What is the net present value of a project : What is the net present value of a project with the cash flows, if the discount rate is 10 percent - How long will it take the firm to recover its initial investment in this project?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Describing taxation for decision makers

A number of specific transactions do not necessarily follow the general tax provision applicable to property transactions. Following are a group of transactions that are subject to specific tax provisions. For each of the situations, you are to an..

  Total depreciation for the assets

a. What method should the assets in the Spain office be depreciated with for tax purposes? b. What is the total depreciation for the assets listed below for 2010?

  Manufacturing cost and selling price

The tax rate in Sweden is 55%. There is an additional shipping charge of $50 per unit to ship the material to Sweden. Transfer prices must be set at U.S. manufacturing cost or the selling price in the U.S.

  Compute the break even point in dollars

Quiltworks company reported actual sales of $2,000,000, and fixed costs of $450,000. The contribution margin ratio is 30%. (a) compute the break even point in dollars

  Determining current dividend per share

If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?

  Joint cost allocation

Elsie Dairy Products Corp. buys one input, full-cream milk, and refines it in a churning process. Allocate the $31,680 joint cost to the spreadable butter and the buttermilk using the following (show work):

  Journal entries of raptor corporation

On July 1, 2002, Raptor Corporation, a wholesaler of used robotic equipment, issued $7,500,000 of ten-year, 10% bonds at an effective interest rate of 12%, Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year o..

  Determining capital structure and dividend policy

Firms A and B are identical except for their level of debt and the interest rates they pay on debt. Each has $2 million in assets, $400,000 of EBIT, and has a 40% tax rate.

  Alternative tax on net capital gain

Agnes is able to reduce her regular income tax liability from $40,000 to $36,000 as the result of the alternative tax on net capital gain. Agnes' tentative AMT is $50,000

  Controlling interest in consolidated net income

Keefe, Inc., a calendar-year corporation, acquires 70% of George Company on September 1, 2009 and an additional 10% on April 1, 2010. What is the controlling interest in consolidated net income for 2010?

  Distinguish between upstream and downstream sales

Why is it important to distinguish between upstream and downstream sales in the analysis of intercompany profit eliminations?

  Question regarding memphis corporation

Memphis Corporation has a cash balance of $200,000.00 on1/1/2008. The company's sales budget for the year was$500,000.00. However, only 80% of the sales for the year arecollectible during the year.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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