A) Incremental cash flows

Question No. 6

The positive and negative cash flows directly associated with a project

C) Operating cash flows

Question No. 7

The cash flows that the project generates after it is in operation

B) Operating cash flows

Question No. 8

The cash flows that are expected to occur at the end of the useful life of a project

B) Shut down cash flows

Question No. 9

What is risk?

B) the degree of probability that the possible outcomes of a particular course of action will occur

Question No. 10

What is uncertainty?

C) unpredictability

Question No. 11

The income statement shows all, EXCEPT:

B) Assets

Question No. 12

The income statement shows all, EXCEPT:

C) Expenses

Question No. 13

The balance sheet shows all, EXCEPT:

B) Revenues

Question No. 14

The balance sheet shows all, EXCEPT:

B) Operating income

Question No. 15

Profitability ratios measure:

E) How the market value of the company’s stock compares to its accounting values

Question No. 16

Debt ratios measure:

B) How much a company owes to others

Question No. 17

Liquidity ratios indicate:

B) How quickly and easily a company can obtain cash for its needs

Question No. 18

Asset activity ratios measure:

B) How efficiently a company uses its assets

Question No. 19

Market value ratios measures:

B) How the market value of the company’s stock compares to its accounting values

Question No. 20

If the asset is sold for more than its purchase price, then:

D) This difference is taxed as the capital gains rate. In addition, the purchase price minus the depreciation book value is ordinary income and is taxed at the ordinary income tax rate

Question No. 21

If the asset sold for less than its purchase price but fore more than its depreciation book value, then:

B) The sales price minus the depreciation book value is ordinary income and is taxed at the ordinary income tax rate

Question No. 22

If the asset is sold for its depreciation book value, then:

A) This difference is taxed as the capital gains rate. In addition, the purchase price minus the depreciation book value is ordinary income and is taxed at the ordinary income tax rate

Question No. 23

If the asset is sold for less than its depreciation book value, then:

B) The depreciation book value minus the sales price is an ordinary loss and reduces the firm’s tax liability by that amount times the ordinary income tax rate

Question No. 24

A company with high fixed operating cost must generate ________ sales revenue to reach the sales breakeven point. A company with low fixed operating costs requires relatively _______ sales revenue to reach its sales breakeven point.

A) Low; high

Question No. 25

A company that automates a factory commits to ________ fixed costs - the expensive equipment. But the company’s variable labor costs are likely to be ________ at a highly automated plant that operates with relatively few employees

A) Low; high

B) High; low

Question No. 26

A company that produces handmade pottery with little overhead, and hires hourly workers as needed, is likely to have _______ fixed costs but ________ variable costs.

C) High; high

Question No. 27

The Pure discount loans mean:

Date: 2015-12-18; view: 620