Business Finance 2
- Created by: mustafaali1838
- Created on: 14-01-20 22:50
Other questions in this quiz
2. corporation donates a valuable painting from its private collection to an art museum. Which of the following are incremental cash flows associated with the donation?
- The deduction from income that it declares for its charitable gift
- The current market value of the painting
- The price the firm paid for the painting
- All of these
3. What effect is expected at the end of the life of a project that initially required a $20,000 increase in net working capital?
- Taxable income is reduced by $20,000
- No effects are expected because the $20,000 is now a sunk cost
- The firm receives a $20,000 cash inflow
- The $20,000 must now be paid by the firm
4. A firm is considering expanding its current operations and has determined the internal rate of return on that expansion is 12.2%. The firm's WACC is 11.8%. Given this, you know the:
- Project will have a lower debt-equity ratio than the firm's current operations
- Project has slightly more risk than the firm's current operations
- Expansion should be undertaken as it has a positive net present value
- Appropriate discount rate for the project is between 11.8% and 12.2%
5. A project's payback period is determined to be 4 years. If it is later discovered that additional cash flows will be generated in years 5 and 6, then:
- he project's payback period will be increased
- The project's payback period will be unchanged
- The project's payback period will be reduced
- The discount rate must be known to determine whether the payback period changes
Comments
No comments have yet been made