Exam%202%20Review%20of_chapter_9_10_11%20REv%201

Exam%202%20Review%20of_chapter_9_10_11%20REv%201 -...

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Exam 2 review problems Chapter 9, 10, 11 Chapter 9 - concepts 1. Capital budgeting decisions generally: A. have long-term effects on a firm. B. are of short-duration. C. revolve around the decision to use either debt or equity securities to finance a project. D. focus solely on whether or not a particular asset should be purchased. E. have minimal effects on a firm's operations. Ross - Chapter 009 #10 SECTION: CHAPTER 9 INTRODUCTION TOPIC: CAPITAL BUDGETING DECISIONS TYPE: CONCEPTS 2. Which one of the following is a capital budgeting decision? A. deciding whether a bank loan should be secured or if bonds should be issued B. determining how many bonds versus how many shares of stock should be issued C. ascertaining the minimum amount of cash which should be kept on hand D. determining the optimal level of inventory to be maintained E. deciding whether or not a newly invented product should be produced Ross - Chapter 009 #11 SECTION: CHAPTER 9 INTRODUCTION TOPIC: CAPITAL BUDGETING DECISIONS TYPE: CONCEPTS
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3. Which one of the following will increase the net present value of a project? A. an increase in the discount rate B. decreasing the amount of each cash inflow C. increasing the amount of the initial cash outflow D. decreasing the required rate of return E. having all incoming cash flows occur in the final year of a project rather than periodically over a five-year period Ross - Chapter 009 #12 SECTION: 9.1 TOPIC: NET PRESENT VALUE TYPE: CONCEPTS 4. A project creates value for a firm's owners: A. when the net present value of the project is positive. B.
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Exam%202%20Review%20of_chapter_9_10_11%20REv%201 -...

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