old-final-key-new

# old-final-key-new - KEY Old Final Exam Name Read the...

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KEY Old Final Exam Name ___________________________________ _____________________________________________________________________________ Read the following statements. Circle T for True and F for False. 1 pt each. T F 1) Double declining balance initially results in higher levels of depreciation than does the straight line method. T F 2) The lower the debt-to-asset ratio, the greater the solvency of a business. T F 3) If the average borrowing rate for funds is 5% and the rate of return on equity is 8%, then the rate of return on capital will be higher than 8%. T F 4) Partial budgets include all costs and returns associated with the enterprises being considered. T F 5) If the shadow price on a labor constraint in linear programming is \$18.00 (per hour) and labor can be hired for \$10 per hour, profits would be increased by hiring more labor. T F 6) If a new tractor is purchased by taking out a loan, the net worth will not change that day but the debt-to-asset ratio will change. T F 7) All depreciation methods will result in the same total depreciation over the full life of the asset. T F 8) A farm business would be considered "profitable" any year net farm income is positive. T F 9) It is possible for the opportunity cost of an input to be zero if there is no alternative use for it and it can't be sold for cash. T F 10) A single partial budget can analyze up to four alternatives.

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Fill in the blanks. 1 point each. 1) __Salvage value____________ is the market value of a depreciable asset at the end of its useful life. 2) ____Reduced cost___________ is a value from linear programming that shows how much the objective function would decrease by producing one unit of an enterprise not in the optimal solution. 3) ___Safety first_____________ rule concentrates on the worst possible outcome for each strategy and picks the strategy with the best outcome if the worst-case situation comes to pass. 4) The current ratio measures ___liquidity_______ or the ability of the business to meet cash obligations as they come due without disrupting the business. 5) _PPC or PPF________ is a curve showing all combinations of two or more products that can be produced with a given set of inputs. 6) If two enterprises are __supplementary______ the output of one can increase while the output of the other stays the same. 7) The ____CDF________________________ is a graph of the values of all possible outcomes for an event and the probability that the actual outcome will be less than or equal to each value. 8) The formula for ____cost recovery____________ is [amortization factor x (beginning value – salvage value)] + (interest rate x salvage value) 9) On a market-based balanced sheet net worth is \$600,000. Value adjustment is \$250,000 and contributed capital is \$200,000. How much is retained earnings? _______150,000________________.
Short Problem 1. 6 points. Original Cost Salvage Value Useful Life Tractor 75,000 15,000 5 C o m b i n e9 8 , 0 0 00 7 In the table below, fill in the annual depreciation for these machines, using both straight line (columns 1 and 2) and double declining balance (columns 3 and 4). Do depreciation to the nearest dollar. For the tractor on DDB, be sure not to go below salvage value.

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## This note was uploaded on 11/15/2011 for the course AGEC 7100 taught by Professor Duffy,p during the Fall '08 term at Auburn University.

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old-final-key-new - KEY Old Final Exam Name Read the...

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