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strayer fin534 quiz 6

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Question;Which;of the following statements is CORRECT?;Answer;Correct Answer:.;Question 2;Which;of the following statements is CORRECT?;Correct Answer;Question 3;Assume;that the economy is in a mild recession, and as a result interest rates and;money costs generally are relatively low. The WACC for two mutually exclusive;projects that are being considered is 8%.;Project S has an IRR of 20% while Project L's IRR is 15%. The projects;have the same NPV at the 8% current WACC.;However, you believe that the economy is about to recover, and money;costs and thus your WACC will also increase.;You also think that the projects will not be funded until the WACC has;increased, and their cash flows will not be affected by the change in economic;conditions. Under these conditions;which of the following statements is CORRECT?;Correct Answer;Question 4;Four of;the following statements are truly disadvantages of the regular payback method;but one is not a disadvantage of this method.;Which one is NOT;a disadvantage of the payback method?;Correct Answer;Does not provide any indication regarding a project?s;liquidity or risk.;Question 5;Which;of the following statements is CORRECT?;Correct Answer;Question 6;Which;of the following statements is CORRECT?;Assume that the project being considered has normal cash flows, with one;outflow followed by a series of inflows.;Correct Answer;Question 7;Which of the following statements;is CORRECT?;Correct Answer:.;Question 8;Which;of the following statements is CORRECT?;Correct Answer;Question 9;Which;of the following statements is CORRECT?;Correct Answer;Question 10;Which;of the following statements is CORRECT?;Assume that the project being considered has normal cash flows, with one;outflow followed by a series of inflows.;Correct Answer;Question 11;Which;of the following statements is CORRECT?;Correct Answer;Question 12;Which;of the following statements is CORRECT?;Assume that the project being considered has normal cash flows, with one;outflow followed by a series of inflows.;Correct Answer;Question 13;Assume;that the economy is enjoying a strong boom, and as a result interest rates and;money costs generally are relatively high. The WACC for two mutually exclusive;projects that are being considered is 12%.;Project S has an IRR of 20% while Project L's IRR is 15%. The projects;have the same NPV at the 12% current WACC.;However, you believe that the economy will soon fall into a mild;recession, and money costs and thus your WACC will soon decline. You also think that the projects will not be;funded until the WACC has decreased, and their cash flows will not be affected;by the change in economic conditions.;Under these conditions, which of the following statements is CORRECT?;Correct Answer;Question 14;Which;of the following statements is CORRECT?;Correct Answer;Question 15;Which of the following statements;is CORRECT?;Correct Answer:.;Question 16;The;relative risk of a proposed project is best accounted for by which of the;following procedures?;Correct Answer;Question 17;Which;of the following statements is CORRECT?;Correct Answer:.;Question 18;Rowell;Company spent $3 million two years ago to build a plant for a new product. It then decided not to go forward with the;project, so the building is available for sale or for a new product. Rowell owns the building free and;clear--there is no mortgage on it. Which;of the following statements is CORRECT?;Correct Answer:.;Question 19;Which;of the following should be considered when a company estimates the cash flows;used to analyze a proposed project?;Correct Answer;Question 20;Which;of the following statements is CORRECT?;Correct Answer;Question 21;A;company is considering a new project.;The CFO plans to calculate the project?s NPV by estimating the relevant;cash flows for each year of the project?s life (i.e., the initial investment;cost, the annual operating cash flows, and the terminal cash flow), then;discounting those cash flows at the company?s overall WACC. Which one of the following factors should the;CFO be sure to INCLUDE in the cash flows when estimating the relevant cash;flows?;Correct Answer;Question 22;Which;of the following factors should be included in the cash flows used to estimate;a project?s NPV?;Correct Answer:.;Question 23;Which;of the following rules is CORRECT for capital budgeting analysis?;Correct Answer;Question 24;Currently, Powell Products has a;beta of 1.0, and its sales and profits are positively correlated with the;overall economy. The company estimates;that a proposed new project would have a higher standard deviation and;coefficient of variation than an average company project. Also, the new project?s sales would be;countercyclical in the sense that they would be high when the overall economy;is down and low when the overall economy is strong. On the basis of this information, which of;the following statements is CORRECT?;Correct Answer;Question 25;2 out of 2 points;Which;of the following statements is CORRECT?;Correct Answer;Question 26;Which;of the following procedures does the text say is used most frequently by;businesses when they do capital budgeting analyses?;Correct Answer;Question 27;A firm;is considering a new project whose risk is greater than the risk of the firm?s;average project, based on all methods for assessing risk. In evaluating this project, it would be;reasonable for management to do which of the following?;Correct Answer:.;Question 28;When;evaluating a new project, firms should include in the projected cash flows all;of the following EXCEPT;Correct Answer;Question 29;Which;of the following is NOT a relevant cash flow and thus should not be reflected;in the analysis of a capital budgeting project?;Correct Answer;Question 30;Suppose;Tapley Inc. uses a WACC of 8% for below-average risk projects, 10% for;average-risk projects, and 12% for above-average risk projects. Which of the following independent projects;should Tapley accept, assuming that the company uses the NPV method when;choosing projects?;Correct Answer

 

Paper#49852 | Written in 18-Jul-2015

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