17.You are considering the purchase of new equipment. Your analysis includes the evaluation of twomachines which have differing initial and ongoing costs and differing lives. Whichever machine ispurchased will be replaced at the end of its useful life. You should select the machine which has the:A.longest life.B.highest annual operating cost.C.lowest annual operating cost.D.highest equivalent annual cost.E.lowest equivalent annual cost.Ross - Chapter 010 #17SECTION: 10.6TOPIC: EQUIVALENT ANNUAL COSTSTYPE: CONCEPTS4
18.The bid price is:Ross - Chapter 010 #18SECTION: 10.6TOPIC: BID PRICETYPE: CONCEPTS19.Which of the following should be included in the analysis of a project?I. sunk costsII. opportunity costsIII. erosion costsIV. noncash expensesRoss - Chapter 010 #19SECTION: 10.2TOPIC: TYPES OF COSTSTYPE: CONCEPTS20.All of the following are related to a proposed project. Which should be included in the cash flow attime zero?I. initial inventory increase of $2,500II. loan of $125,000 to commence a projectIII. depreciation tax shield of $1,100IV. initial purchase of $6,500 of fixed assetsRoss - Chapter 010 #20SECTION: 10.4TOPIC: NET WORKING CAPITALTYPE: CONCEPTS21.Changes in the net working capital:A.can affect the cash flows of a project every year of the project's life.B.only affect the initial cash flows of a project.C.are included in project analysis only if they represent cash outflows.D.are generally excluded from project analysis due to their irrelevance to the total project.E.affect the initial and the final cash flows of a project but not the cash flows of the middle years.Ross - Chapter 010 #21SECTION: 10.4TOPIC: NET WORKING CAPITALTYPE: CONCEPTS5
22.Which one of the following is a cash inflow? Ignore any tax effects.Ross - Chapter 010 #22SECTION: 10.4TOPIC: NET WORKING CAPITALTYPE: CONCEPTS
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- Fall '09