Reference no: EM132601223

Question 1: One difference between a financial lease and operating lease is that:

A. There is often a call option in a financial lease.

B. There is often an option to buy in an operating lease.

C. An operating lease is often cancellable by the lessee.

D. A financial lease is often cancellable by the lessee

Question 2: Depreciation is included as a cost in which of the following techniques,

A. Accounting rate of return

B. Net present value

C. Internal rate of return

D. None of the above

Question 3: The principal reason for the existence of leasing is that:

A. Intermediate-term loans are difficult to obtain.

B. This is a type of financing unaffected by changes in tax law.

C. Companies, financial institutions, and individuals derive different benefits from owning assets.

D. Leasing is a renewable source of intermediate-term funds.

Question 4: To say that there is "asymmetric information" in the issuing of common stock or debt means that:

A. Investors have nearly perfect information.

B. The markets have nearly perfect information

C. Investors have more accurate information than management has.

D. Management has more accurate information than investors have.

E. All

Question 5: If two alternative proposals are such that the acceptance of one shall exclude the possibility of the acceptance of another then such decision making will lead to,

A. Mutually exclusive decisions

B. Accept reject decisions

C. Contingent decisions

D. None of the above

Question 6: The concepts of present value and future value are:

A. Directly related to each other

B. Not related to each other

C. Proportionately related to each other

D. Inversely related to each other.

Question 7: If you have Birr1000 and you plan to save it for 4 years with an interest rate of 10%, what is the future value of your savings?

A. Birr 1464.00

B. Birr 1000.00

C. Birr 1331.00

D. Cannot be determined.