Prelim II 2009 solution - Name: _ NetID: _ BDCDB BCEAE 1....

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Name: ___________________________________ NetID: _______________________ Prof. Q. Ma, HAdm 2222 Fall 2009 1/6 B D C D B B C E A E 1. The changes in a firm's future cash flows that are a direct consequence of accepting a project are called _____ cash flows. A. net present value B. incremental C. stand-alone D. after-tax E. erosion 2. Which one of the following best illustrates a negative side effect in project analysis? A. opting to decrease your work force by firing two part-time employees with negative attitude towards hard work B. providing both ketchup and mustard for your customers after the negative feedback on your homemade mustard C. repairing the roof of your hotdog stand because your past month profit appears negative D. positive changes in sales of hot dogs but negative changes in sales of hamburgers E. choosing to sell left chicken wings but not right ones 3. When conducting a worst case scenario analysis, you assume that: A. the number of units sold and the variable cost per unit are at the low end of their ranges. B. the salvage value will be at the expected value of its possible range. C. fixed costs will be at the high end of its range. D. sales quantity will be at the high end of its range while the sales price is the lowest possible. E. the variable costs per unit are at the low end of potential cost range. 4. Suppose Teresa Giligan, an experienced investor bought $50,000 worth of Marriott International shares today from Smith Barney of Ithaca, her broker. This is a _____ transaction. A. dealer market B. auction C. over-the-counter D. secondary market E. primary market 5. Kelly’s Corner Bakery purchased a piece of land in Oil City 6 years ago at a cost of $280,000. Today, that lot has a market value of $340,000. At the time of the purchase, the company spent $15,000 to level the lot and another $20,000 to install storm drains. The company now wants to build a new facility on that site. The building cost is estimated at $1.47 million. What amount should be used as the initial cash flow for this project? A. -$1,470,000 B. -$1,810,000 (-1.47-.34), notice .34 is the opportunity cost for the lot. C. -$1,825,000 D. -$1,845,000 E. -$1,860,000
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Name: ___________________________________ NetID: _______________________ Prof. Q. Ma, HAdm 2222 Fall 2009 2/6 6. You are considering the purchase of a new van for The Statler Hotel. Your analysis includes the evaluation of two models which have different purchase prices, ongoing operating costs and useful lives. Whichever model is purchased will be replaced at the end of its useful life. You should select the model that has the: A. Lowest purchase price. B. Lowest equivalent annual cost. C. Lowest annual operating cost. D.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/03/2009 for the course H ADM 222 at Cornell University (Engineering School).

Page1 / 6

Prelim II 2009 solution - Name: _ NetID: _ BDCDB BCEAE 1....

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online