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Which of the following is a problem associated with bankruptcy?




Which of the following is a problem associated with bankruptcy? (Points: 1);It is embarrassing for managers to work at a firm that fails.;Bankruptcy shifts assets to more highly valued uses.;The costs associated with bankruptcy further reduce cash flows to shareholders.;A company immediately ceases to be able to conduct business once it has filed for bankruptcy.;Question 2. 2. A benefit of debt financing is that: (Points: 1);not making scheduled debt payments can lead to bankruptcy.;interest paid on debt is tax-deductible.;loans must be repaid.;debt magnifies bad outcomes (i.e., makes earnings more variable).;Question 3. 3. GMX Resources, an independent oil and gas exploration and production company, has a tax rate of 38%. If it purchases $2,000,000 of drilling pipe, what is the after-tax cost of this expenditure? (Points: 1);$760,000;$1,240,000;$2,000,000;$2,760,000;Question 4. 4. The key to successful capital budgeting is to: (Points: 1);choose investments that maximize a company?s net income.;not exceed the budget.;choose investments that have the shortest payback period.;choose investments whose present value of expected benefits exceed the present value of their expected costs, and so are value creating.;Question 5. 5. Capital structure refers to a company?s: (Points: 1);investment of capital.;management of working capital?current assets and liabilities.;mix of debt and equity used to fund the firm?s assets.;mix of marketable securities.;Question 6. 6. In perfect capital markets, the capital structure decision is: (Points: 1);important because it affects the cash flows to shareholders.;important because debt and equity are taxed differently.;irrelevant because the decision has no effect on cash flows.;important sometimes.;Question 7. 7. Rather than just add up all the costs associated with a proposed investment, the with-and-without principle recognizes that some cash flows might not be incremental. Examples of nonincremental project costs are: (Points: 1);sunk costs, additional revenues, and COGS of new products.;sunk costs, allocation of overhead, and cannibalism of sales.;sunk costs, allocation of overhead, and depreciation of new equipment.;allocation of overhead, additional revenues, and costs.;Question 8. 8. You receive an annual raise of $4,000. If you tax rate is 22%, how much will this increase your after-tax earnings? (Points: 1);$880.00;$3,120.00;$4,000.00;$4,880.00;Question 9. 9. To determine incremental cash flows, we apply the with-and-without principle, which compares: (Points: 1);the cash flows of the investment with tax adjustments to the cash flows without tax adjustments.;the cash flows of the investment with depreciation to the cash flows without depreciation.;the cash flows of the company with the investment to the cash flows without the investment.;all financing costs except for sunk costs.;Question 10. 10. When determining the cash flows for a proposed investment, we generally ignore overhead. Many overhead costs are fixed and will be paid whether the project is accepted or not, so they are not incremental. Which item on the following list, though similar to overhead, would be included as an incremental cash flow? (Points: 1);the cost of a new managerial position specifically for a proposed project;the allocation of factory floor space by square feet or square meters utilized by a proposed project;the allocation of time that salaried managers used developing a proposed project;the allocation of headquarters rent or lease expense based on anticipated revenue of a proposed project


Paper#34086 | Written in 18-Jul-2015

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