KIC000186 - Name: _ Quiz #2 FIN 310, Corporate Finance,...

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Name: _ Quiz #2 FIN 310, Corporate Finance, Section B Please circle one of the possible answers (5 points each): I. A firm with high operating leverage is characterized by while one with high financial leverage is characterized by _ a. low fixed cost of production; low fixed financial costs b. high variable cost of production; high variable financial costs Q) high fixed costs of production; high fixed financial costs d. low costs of production; high fixed financial costs e. high fixed costs of production; low variable financial costs 2. The discounted payback rule may cause: a. some positive net present value projects to be rejected. b. the most liquid projects to be rejected in favor of less liquid projects. c. projects to be incorrectly accepted due to ignoring the time value of money. d. some projects with negative net present values to be accepted. @ Both A and D. 3. Your firm has annual fixed costs of $200,000, a selling price of $16 per widget, variable costs of $7 per widget. Calculate the break-even point.
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This note was uploaded on 09/08/2011 for the course FIN 350 taught by Professor Borisova during the Spring '11 term at Iowa State.

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KIC000186 - Name: _ Quiz #2 FIN 310, Corporate Finance,...

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