FIT_BUS 5440_Test_4

FIT_BUS 5440_Test_4 - test grade is 85 percent ofessor has...

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test grade is 85 percent rofessor has configured this test to allow students to review: Questions answered incorrectly. Questions answered correctly. Students answers. Correct answers. ion 1 - Multiple Choice ID: 4577513 he correct answer has been circled. ion: Which of the following rules is CORRECT for capital budgeting analysis? The interest paid on funds borrowed to finance a project must be included in the project’s estimated cash flows. Only incremental cash flows are relevant when making accept/reject decisions. Sunk costs are not included in the annual cash flows, but they must be deducted from the PV of the project’s other costs when eaching the accept/reject decision. A proposed project’s estimated net income as determined by the firm’s accountants, using generally accepted accounting principl GAAP), is discounted at the WACC, and if the PV of this income stream exceeds the project’s cost, the project should be accept f a product is competitive with some of the firm’s other products, this fact should be incorporated into the estimate of the relevan ash flows. However, if the new product is complementary to some of the firm’s other products, this will have no effect on the ca lows used in the analysis. ion 2 - Multiple Choice ID: 4577505 rrect ion: Sorenson Stores is considering a project that has the following cash flows: roject has a payback of 2.5 years, and the firm’s cost of capital is 12%. Assume all cash flows occur evenly throughout the year. project’s NPV?
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$577.68 $765.91 $1,049.80 $2,761.32 $3,765.91 ion 3 - Multiple Choice ID: 4577525 rrect ion: Which of the following statements is most CORRECT? Tax considerations often play a part in mergers. If one firm has excess cash, purchasing another firm exposes the purchasing firm
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This note was uploaded on 12/14/2011 for the course BUS 5480 taught by Professor Nwabueze during the Fall '11 term at FIT.

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FIT_BUS 5440_Test_4 - test grade is 85 percent ofessor has...

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