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Business 82 REVIEW Chapters 6-10 (101-193Q)- Benny?s Bumpers is incorporated in Ohio but also conductS...

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101. Benny?s Bumpers is incorporated in Ohio but also conducts business in Florida. Benny?s Bumpers is a _______ in Ohio but is a _________ in Florida.;a);b);c);d);C corporation, S corporation;global, multinational;primary corporation, secondary corporation;domestic corporation, foreign corporation;102. Suzanne Limley was just elected to the board of directors at United Bank Corporation. As a board member, she is expected to represent the interests of;a);b);c);d);senior bank management.;shareholders.;creditors.;customers.;103. Mike?s Motorcycles, Inc., has just incorporated the business in Delaware. John Littleton, a partner, now becomes a;a);b);c);d);shareholder.;CEO.;management trainee.;board member.;104. You are in a group of investors that is considering taking over Sips and Chips, the cybercafe in town. Several;investors favor reorganizing the cafe by forming a C corporation. You want to make sure these investors are;aware of the possible drawbacks of this form of ownership, so you point out that;a) this type of business lacks permanence.;b) earnings that the investors receive would be taxed both as corporate income and as income;to the investors.;c) all of the investors would be subject to unlimited liability for any debts the firm incurs.;d) all of the items in this list would be legitimate drawbacks of forming a C corporation.;105. Recently, several well-known large companies such as Home Depot, Inc., and Time Warner, Inc., have been;criticized for paying CEOs exorbitant salaries and bonuses even when the corporations they lead have lost;value. This is considered a failure on the part of the __________ of these firms to protect the rights of the;who elected them..;a);b);c);d);boards of directors, creditors;boards of directors, stockholders;top management, employees;audit committee, partners;106. ___________ are clauses in senior management contracts that can compensate executives with millions of dollars in severance pay.;a);b);c);d);Indenture agreements;Silver spoons;Golden parachutes;Bomb shelters;107. Like a statutory close corporation, a limited liability company (LLC);a);b);c);d);files articles of incorporation outlining operational and organizational levels.;is not required to elect a board of directors or hold annual stockholders? meetings.;follows the same state laws that C corporations follow.;has no more than 50 shareholders.;108. Elaine and several friends want to start a business. They like the idea of limited liability. However, they want to keep their organization simple and avoid the need to have formal meetings. Each member of the group wants to actively participate in managing the business and share in any profits. Which of the following forms;of business ownership would best satisfy the goals of Elaine and her friends?;a);b);c);d);general partnership.;limited partnership.;nonprofit corporation.;statutory close corporation.;109. To increase production capacity and provide consumers with market stability, Exxon and Mobil created;ExxonMobil. This would be an example of a _______ merger.;a);b);c);d);conglomerate;horizontal;vertical;limited liability;110. In 1988, Philip Morris, the leading cigarette manufacturer in the United States, merged with Kraft, Inc., the;maker of several leading food brands, such as Miracle Whip, Velveeta, and Maxwell House. This;combination would be classified as a _________ merger.;a);b);c);d);horizontal;vertical;conglomerate;macro;111. Tim, Bill, and Mel want to start a rehabbing business. All of them want to take an active role in managing;their company while also protecting their personal assets from unlimited liability. They are likely to find that;forming a ______________ will meet their needs.;a);b);c);d);nonprofit corporation;limited partnership;limited liability company;general partnership;112. Compared to C corporations, an advantage of an LLC is that;a) C corporations must file paperwork with the state when they are formed, while no;paperwork needs to be filed to form an LLC.;b) C corporations are limited to no more than 100 owners, while LLCs can have an unlimited;number of owners.;c) earnings of C corporations that are distributed to owners are subject to double taxation, but;the earnings of LLCs pass through the company and are taxed only as personal income.;d) LLCs are classified as domestic firms in all of the states where they operate, while;corporations are classified as ?foreign? business entities in states other than the one in;which they are incorporated.;113. In a typical business format franchise, the franchisor;a);b);c);d);pays royalties and fees to the franchisees.;provides the franchisees with management training and support.;allows franchisees to operate loosely, as long as they are profitable.;owns all of the franchise outlets but leases them to the franchisees.;114. Successful franchisors are particularly vigilant in avoiding the ______________, a situation where the;behavior of an incompetent or irresponsible franchisee harms the reputation of the franchisor and other;franchisees.;a);b);c);d);pie-in-the-sky effect;saturated effect;negative halo effect;restructuring effect;115. Jacob currently works as a manager at a major corporation but has been thinking about quitting to start his;own business. Which of the following reasons would most likely explain Jacob?s interest in making this major;career change?;a);b);c);d);He wants a job with fewer responsibilities.;He wants more benefits and a steadier income.;He doesn?t like the risk associated with working in the corporate environment.;He wants to have more independence and flexibility than his corporate position allows.;116. Michael Peters is a middle-aged professional who lost his job five months ago when his former employer;downsized. He?s been actively looking for work at all of the nearby companies, but he hasn?t been able to find;a job that truly uses his talents or abilities?or that offers an income anywhere close to what he earned in his;previous position. He is beginning to feel that the only way to survive in his current situation is to start his;own business. Michael might well become a(n);a);b);c);d);venture capitalist.;intrapreneur.;necessity entrepreneur.;frictional worker.;117. Greg has developed an automobile engine that runs efficiently for up to three hours on a single russet potato.;His friends have pointed out how difficult it will be to get car manufacturers to adopt his new technology and;that it could take years to get enough service stations to stock potatoes to make it practical for people to rely;on the new energy source for long trips. But Greg is convinced he can make the U.S. economy energy;independent, thus changing the world. He plans to create a new business called Spuds-to-Go to promote his;new engine. Greg has;a);b);c);d);vision.;an external locus of control.;opportunity sense.;strong strategic planning skills.;118. Which of the following questions would an entrepreneur be most likely to ask in the aftermath of a business;failure?;a);b);c);d);Why did I ever think I?d be good at running a business on my own?;When will other people start recognizing my talents and abilities?;What can I learn from this experience that will help me be more successful in the future?;When will this string of bad luck end?;119. Cal is thinking about starting a small business and is trying to access the potential opportunities and threats;associated with a new start-up. He?s talked with friends and associates about his plans, and several have;offered him opinions and advice. The comments of four friends are summarized below. Which of these;statements would probably be the most helpful to Cal?;a) You are likely to face some lean months at first, so manage your money carefully. Avoid;the temptation to make splashy purchases.;b) One advantage of operating a small business is the fact that you don?t have to worry very;much about government regulation.;c) Focus on the domestic market. There is no practical way for you to compete effectively;against big businesses in foreign markets.;d) Aim your efforts at the broadest possible market segments. Those are the ones that offer;you the greatest potential to make profits quickly.;120. Sal is thinking about starting a small business and is trying to access the potential opportunities and threats;associated with a new start-up. She?s talked with friends and associates about her plans, and several have;offered her opinions and advice. The comments of four friends are summarized below. Which of these;statements would probably be the most helpful to Sal?;a) Since your company will be small and new, it?s important to impress your customers.;Spend a lot of money on upscale offices and state-of-the-art equipment to create a;?WOW? factor.;b) Don?t worry about your lack of business experience and limited business skills.;Entrepreneurs can make up for a lack of skills with enthusiasm and hard work.;c) Hang in there. If a business is going to fail, it almost always happens in the first year. If;you can stick it out for more than a year, you?ll be on your way to success.;d) Find a market segment that you can profitably serve but which is too small to attract larger;companies.;121. Dana is thinking about starting her own graphics design business but is keenly aware of the fact that she lacks;much business experience. A friend has suggested that she consider going to work for someone else in the;same type of business before going out on her own. This advice is;a) usually a bad idea. Working for someone else tends to stifle creativity.;b) often a good idea because it allows you to learn the ins and outs of running that type of;business with little personal risk. But keep in mind that if you work for someone else too;long you might get too comfortable in your position to follow through with your plans.;c) almost always an excellent idea. Most studies suggest that the vast majority of successful;small business owners worked for at least 10 years for someone else before they launched;their own company.;d) sometimes a good idea, but more often it?s a waste of time. Most small businesses are so;simple to manage that prior experience isn?t really necessary.;122. Barnie has been a very successful sales rep for a big corporation and has managed to save up a large sum of;money. He?s tired of working for the big company and is wondering if he should sink his savings into a new;business. He is willing to work hard and has very good people skills. But he hasn?t been able to develop a;good business concept from scratch. He also realizes that he doesn?t have strong financial skills and might;need some training and assistance in this area. Someone like Barnie;a);b);c);d);is unlikely to find a small business opportunity that suits his needs.;is likely to find franchising an attractive option.;would find that starting a business from scratch is the best way to go.;obviously needs to develop a stronger external locus of control before leaving his;corporation.;123. Sheila loves taking care of animals and has thought about starting her own pet grooming business. However;she doesn?t know much about the growth potential for this type of business or the amount of competition she;would face. She also wants to find out if there are any government regulations she would need to deal with.;She should be able to find answers to many of her questions by contacting the;a);b);c);d);American Association of Entrepreneurs.;Federal Trade Commission.;Small Business Administration.;local chapter of the federal government?s Entrepreneurial Advisory Board.;124. Barry and Inga recently founded a hot new company that is growing rapidly. They need more money to;finance their company?s growth and have been approached by a venture capital firm. Barry and Inga should;realize that the venture capital firm will only provide financing;a);b);c);d);if they agree to avoid any risky investments.;after they have paid off all of the personal debt they incurred to start their company.;in exchange for a significant stake in their firm?s ownership.;if they agree to pledge specific company assets as collateral to back the loan.;125. Cynthia is a successful business woman who has amassed a large amount of money by investing in companies;with the potential for rapid growth. These companies are either later sold to other investors or the companies;offer stock to the public. While she is excited about the possibility of helping these businesses grow, her;primary motivation is to make money for herself. Cynthia seems to match the profile of a(n);a);b);c);d);angel investor.;venture capitalist.;institutional investor.;limited partner.;126. Senator Taxmoore wants to help revitalize inner cities and stimulate more innovation. He could achieve both;of these goals by supporting legislation that would;a);b);c);d);encourage the formation of small businesses.;make it illegal for firms to outsource jobs.;increase government benefits for those that are unemployed.;call for greater government ownership of factories located in inner cities.;127. Senator Foghorne is running for re-election. One of his political proposals is the enactment of new legislation;that will provide American workers who are laid off with much higher unemployment compensation and will;guarantee those benefits for a full year. If enacted, Senator Foghorne?s proposal is likely to;a);b);c);d);lower tax rates on small businesses.;have a negative impact on entrepreneurship rates.;encourage more people to start new businesses.;reduce the federal deficit.;128. Tiny Timber Tree Farms applied to United Bank for a business loan. Which financial statements would the;loan officer of the bank be most likely to request?;a) Balance sheets, income statements, and cash flow statements.;b) Journals, ledgers, and trial balances.;c) Total debits and total credits.;d) The prospectus, statement of retained earnings, and total liability statement.;129. Samantha is an accounting major who has been disturbed by all of the recent accounting scandals. She has;decided to dedicate her career to catching those involved in embezzlement, securities fraud, money;laundering, and other white collar crimes. One way Samantha could achieve this would be to seek training as;a(n);a);b);c);d);certified bookkeeper.;forensic accountant.;transactional accountant.;FASB analyst.;130. Recent calls to reform GAAP have focused on the need for the FASB to;a) eliminate the necessity for standardization so that small businesses and big businesses will;account for earnings in significantly different ways.;b) give firms more flexibility in their accounting procedures so that they can present their;earnings in the most meaningful way.;c) allow CPA firms a greater role in advising the firms that they audit.;d) make it more difficult for firms to manipulate results, thus making it easier for investors to;compare financial results of different firms.;131. The accounting equation shows us that the value of the firm?s assets must equal the value of the firm?s;a);b);c);d);earnings at a point in time.;revenues minus expenses.;owners? equity.;financing provided by owners and creditors.;132. Lottadoe?s liabilities are $130,000, and its owners? equity is $170,000. This means that Lottadoe?s;a);b);c);d);total assets are $300,000.;net income is $40,000.;net income for the current year was $300,000.;net cash flow for the current year was $40,000.;133. Which of the following statements is the rationale for the accounting equation?;a);b);c);d);What the firm owns minus what it owes creditors equals what it is worth to its owners.;A firm is worth its equity minus its assets.;The firm?s profit is equal to its revenue minus its expenses.;Assets must equal earnings minus expenses.;134. As represented on the balance sheet, a firm has two sources of funds: the firm?s;a);b);c);d);assets and liabilities.;liabilities and the owners? equity.;assets and owners? equity.;assets and earnings.;135. Sabiha is the small business loan officer at Regional National Bank. It is her job to approve loans for small;businesses so that the local economy will grow. One factor she looks at carefully when making loan decisions;is the amount of debt the firm already has outstanding. She can find this information by looking at the firm?s;a);b);c);d);income statement.;balance sheet.;statement of cash flows.;cash budget.;136. A business has two sources of funds: the owners and the non-owners. The financing provided by owners is;represented on the balance sheet as ____________, and the financing provided by non-owners is represented;on the balance sheet as ___________.;a);b);c);d);liabilities, retained earnings;dividends, interest;owners? equity, liabilities;revenues, expenses;137. A firm?s current liabilities;a) are what it owes to its shareholders.;b) are due in less than a year.;c) do not have to be repaid on any specific date. Instead, repayment can be deferred as long;as the firm is willing and able to make the required interest payments.;d) must equal its current assets.;138. A firm?s cost of goods sold is subtracted from the ________________ on the ___________________ in order;to compute the firm?s ____________________.;a);b);c);d);total assets, balance sheet, net worth;revenue, statement of cash flows, cash balance;revenue, income statement, gross profit;liabilities, balance sheet, total profit;139. Mason owns stock in Munnymacher Inc. and wants to see if he can identify any trends in its financial;performance over the past few years. This suggests he would want to perform a(n);a) incremental analysis.;b) horizontal analysis.;c) vertical analysis.;d) elasticity analysis.;140. Radcliffe McCoy is the financial manager for his company. He is comparing income statements from the past;three years to see the trend (if any) in cost of goods sold and other expenses. He is using;a);b);c);d);vertical analysis.;horizontal analysis.;ratio analysis.;managerial analysis.;141. Small business owner Barry Shain has always paid all of his current bills on time. However, this year he has;more bills coming due than normal. Which type of ratio would help him evaluate whether he is likely to have;enough cash to continue meeting his obligations over the next year?;a);b);c);d);liquidity ratio.;managerial ratio.;leverage ratio.;profitability ratio.;142. By calculating a ____________, Paul Pezzelle determined that his firm was financed by debt and equity at a;ratio of 1:1 (50 percent with debt and 50 percent with equity).;a);b);c);d);liquidity ratio;managerial ratio;leverage ratio;profitability ratio;143. Tiny Timber Tree Farms has decided to adopt activity-based costing. One likely reason the firm?s accountants;decided on this approach was to;a);b);c);d);provide a more meaningful way to assign overhead costs to specific products.;simplify the process of assigning costs to specific products.;base costing on the amount of direct labor used to produce each product.;move from a system that focuses on assigning costs to goods and services to a system that;assigns costs to activities.;144. Arvid?s Moving and Storage has a fleet of 37 trucks. Arvid currently has two of his own mechanics who;perform all of the routine maintenance as well as other minor repairs on all of the trucks. However, he;wonders whether outsourcing this work would be more cost-effective and asks his accountant to work with;two managers to analyze such a change. Which of the following types of analysis would the accountant be;most likely to use?;a);b);c);d);Incremental analysis.;Horizontal analysis.;Ratio analysis.;CPM analysis.;145. Pierre?s Gourmet Foods produces high-quality desserts and appetizers that are distributed by upscale grocery;stores. When assigning production costs to its various food products, the costs of ingredients used to make a;product are ____________, the cost of the workers who prepare the product are _______________, and the;cost of the rent and insurance on the building are ________________.;a);b);c);d);direct costs, derived costs, fixed costs;tax-exempt costs, taxable costs, depreciable expenses;fixed costs, proportional costs, capital costs;direct materials costs, direct labor costs, overhead costs;146. Desmond owns a restaurant and is considering buying his desserts from a local bakery rather than continuing;to hire a pastry chef for this purpose. When he performs an incremental analysis, which of the following;would be considered an incremental cost?;a) The utilities, including the oven costs that are shared with the other chefs, during regular;hours of operation.;b) The pastry chef?s wages.;c) The head chef and salad chef?s wages.;d) The insurance on the restaurant?s building and equipment.;147. Preparing a good budget is beneficial because;a) it fosters better communication and coordination among members of various departments;with direct responsibility for producing products and services.;b) it provides direction through the identification of goals and plans of action.;c) it provides an effective way to monitor progress.;d) All of these statements are benefits of budgeting.;148. As a financial manager for his firm, Martin Meyer is worried about possible cash shortages his firm might;face over the next few months. The ____________ budget would help him identify periods when cash might;be very tight.;a);b);c);d);revenue;sales;liquidity;cash;149. Sally Meadows works for Swictek Industries. Her primary responsibilities involve management of the firm?s;working capital and the analysis of long-term investment opportunities for Swictek. Sally?s job is in the area;of;a);b);c);d);managerial accounting.;logistics.;financial management.;operational budgeting.;150. At Chips and Dips, a local convenience market, an increase in the inventory turnover ratio would indicate that;it was;a);b);c);d);at risk of holding too much inventory.;selling its stock of merchandise more quickly.;relying heavily on credit sales.;more likely to face a cash flow problem.;151. At Sips and Chips, a local cybercafe, a financial manager has calculated the debt to equity ratio and;discovered it is equal to one. This means that Sips and Chips;a);b);c);d);relies exclusively on debt financing to meet its long-term financing needs.;is at risk of being unable to pay its short-term debts when they come due.;is relying on equal amounts of debt and equity financing.;has an equal amount of current assets and current liabilities.;152. At Sips and Chips, the local cybercafe, management is measuring the profit earned on each dollar invested by;the stockholders. Managers are measuring the firm?s;a);b);c);d);degree of financial leverage.;earnings per share.;return on assets.;return on equity.;153. Snow International, a ski company in the Midwest of the United States, has 500 shares of outstanding;common stock and has not issued any preferred stock. Net income is $27,500. What would be the earnings per;share calculation?;a);b);c);d);$27,500/500 = $55;500/$27,500 = $.018;$27,500? 500 = $13,750,000;$27,500 - 500 = $27,000;154. Two firms in the same industry are the same size and have very similar real-world financial results. The;profitability ratios of these firms;a) should be very similar because both firms must use exactly the same mathematical;formulas to calculate their ratios.;b) could be quite different if they use different GAAP-approved methods to construct their;financial statements.;c) could be very different because ratios are based on projections of future performance;rather than on actual real-world performance.;d) should be identical because GAAP requires all firms in the same industry to use the same;accounting methods to construct their financial statements and compute their key financial;ratios.;155. Kendra Wright was recently hired by High Adventure Inc. to be a financial manager. She is surprised to learn;that the company currently operates ?by the seat of its pants.? As she seeks to develop a more rigorous;financial plan, she will have to;a) work independently of others in the organization.;b) avoid too much reliance on pro forma statements.;c) seek input from the managers of the various functional units of the firm as well as the;firm?s accountants.;d) make heavy use of a technique known as value mapping.;156. The manager of Timmy?s Timbers, the local landscape company, realizes that he runs a seasonal business. For;example, although his sales do not start coming in until April and May, he needs to be well-stocked in March;in anticipation of the spring sales. He should create a _________ to help plan for when the firm will need to;arrange for additional funds in order to avoid a cash crunch.;a);b);c);d);pro forma income statement;pro forma balance sheet;set of leverage ratios;cash budget;157. George?s Car Repair Shop buys parts from a local parts distributor. The distributor delivers the parts promptly;under terms stated on the invoice that say: 3/15 net 30. George has always paid the bill in just 30 days and has;never really worried about these invoice terms. Your advice to George is;a) He is smart to wait until the 30th day before making payment because this gives him the;use of cash for the maximum possible amount of time.;b) These terms mean that the payment is due in 30 days, but that as long as he is not more;than 15 days late, he can avoid the 3 percent late penalty. Thus, George could actually;delay payment until the 45th day without incurring a penalty.;c) If possible, it is smart to pay the bill within 15 days after receipt because then he will;receive a 3 percent discount. If he does a lot of business with this firm, this will result in a;sizeable savings for George by year?s end.;d) George should not react to these payment terms because they are a tactic used by many;distributors to get customers to pay early, with little or no benefit to George.;158. United Financial Corporation is a large, well-known company with an excellent credit rating. Its financial;managers project that United Financial will need to obtain some short-term financing in the near future. These;same managers believe that interest rates on short-term loans from banks are currently undesirably high. One;financing option these financial managers might find attractive would be to;a);b);c);d);issue T-bills.;sell some additional bonds.;issue commercial paper.;establish a revolving credit arrangement with its banker.;159. Sally McGregor sells lawn and garden products in bulk to companies that do lawn and garden work. She;extends credit to her customers for 60 days, but she is worried about cash flow problems. But this is a highly;competitive business and most of her competitors also offer credit?some of them for up to 90 days. Sally is;also concerned with the cost of billing and collecting money from her customers, some of whom make it a;habit of paying late. Which of the following statements represents the most useful advice to Sally?;a) Sally can reduce her cash flow issues by extending credit for 90 days.;b) Sally should consider a ?cash only? policy and eliminate credit sales. This would eliminate;her cash flow problems and free up money and other resources that she now devotes to;collecting past due accounts.;c) Sally would be able to generate more sales and reduce her collection costs by cutting the;credit period to 30 days.;d) Sally should consider selling her receivables to a factor, thus allowing her to receive cash;more quickly and eliminate the hassles associated with collections.;160. Jasmine started a small business two years ago. The business is just now seeing some success, and Jasmine;notes that she has a few thousand dollars more in her bank account than she currently needs to pay her bills.;However, because of the uncertainty of cash flows in her new business, she is concerned that she may need;access to these funds on fairly short notice in the future. Given this situation, Jasmine should;a);b);c);d);invest the funds in common stocks.;keep all of these funds in her checking account.;put some of her excess cash into money market mutual funds.;use her excess cash to buy intangible assets.;161. William is the credit manager for Timmy?s Timbers, a local landscaping company. Just recently, his mulch;supplier noted on the invoice the terms of 3/15 net 30. What does this mean?;a) Timmy?s Timbers will get a 3 percent cash discount if the balance owed to the supplier is;paid within 15 days, otherwise the entire balance is due in 30 days.;b) The entire amount is due in 30 days, but the 3 percent late penalty will only be imposed if;payment is more than 15 days late.;c) Timmy?s Timbers Tree Farm must pay 15 percent of the amount due in 3 days, then the;remaining 85 percent is due in 30 days.;d) Timmy?s Timbers has to pay the invoice within 30 days. Late payment penalties are 3;percent if the bill is paid in less than 60 days, but they rise to 15 percent if payment is not;made within 60 days.;162. Timmy?s Timbers has just arranged a $300,000 line of credit with its banker for the next year. This means;that;a) Timmy?s Timbers now has $300,000 more in cash in its bank account but must begin;paying financing charges on these funds immediately.;b) Timmy?s Timbers now has guaranteed access to up to $300,000, but it must pay a;commitment fee on any unused portion of these available funds.;c) as long as its credit rating doesn?t deteriorate, Timmy?s Timbers can take out loans of up;to $300,000 from the bank over the next year without having to negotiate new loan;agreements each time it needs to borrow funds.;d) the bank now holds commercial paper issued by Timmy?s Timbers that will be worth;$300,000 plus interest when it matures. In exchange, the bank provides Timmy?s Timbers;with $300,000 of cash that it can use immediately or at any time over the next year.;163. Firms that _______________ may find that they can achieve their objective by developing a relationship with;a firm that offers factoring services.;a) need to establish a source of long-term financing that avoids fees and commissions;b) have larger than necessary cash balances and want to find a safe way to invest the excess;cash;c) rely heavily on credit sales and want to speed up their receipt of cash;d) plan to issue large sums of commercial paper in the near future;164. Denise is 25 years old and has decided to begin saving for retirement by setting aside $2,500 each year. She;expects to earn 6 percent on the funds in her retirement account. Under this scenario, she will have $413,000;in her retirement account, even though she only made $100,000 in contributions. The additional $313,000 is;the result of;a);b);c);d);accruing.;discounting.;compounding.;factoring.;165. Dan inherited $1,000 from his grandmother?s estate. He has found an investment opportunity that will earn 7;percent interest compounded annually each year for the next two years. If he puts his money into this;investment, in the first year he will earn _____ in interest, while in the second year he will earn _______ in;interest.;a);b);c);d);$7, $14.70;$70, $77;$70, $74.90;$100.70, $107.77;166. Alison has $5,000 to invest and is trying to decide between two investment opportunities. One investment;offers her future cash flows of $2,000 for each of the next five years. Another investment offers her future;cash flows of $5,000 in year five and $7,500 in year six. You tell her that in order for her to compare these;two investments, she will need to calculate the _________ of the future cash flows.;a);b);c);d);common payout value;average annual payout;annuity value;present value;167. Flying High Inc. is trying to decide whether to invest in a new robot for its packaging line. The new robot will;cost $370,000 and is expected to significantly increase efficiency and thus save the company $67,000 per year;for the next eight years. At that time, the robot will be completely depreciated and may not have any salvage;value. As part of the financial management team for Flying High, you are assigned to evaluate this proposal.;A key part of your analysis will probably consist of a computation of the proposal?s;a);b);c);d);gamma coefficient.;net present value.;total net cash flow.;breakeven point.;168. A wealthy relative promises to give you $5,000 when you complete all of the college courses needed to earn a;degree in business. The present value of this future sum must be;a) more than $5,000, but the exact value depends on how long it takes you to earn your;degree and the rate of interest you can earn on investments.;b) less than $5,000, but the exact value depends on how long it takes you to earn your degree;and the rate of interest you can earn on investments.;c) more than $5,000, but the exact value depends on the exchange rate for the do

 

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