Chapter 3 Quiz
1.If net income is positive, then cash flow from operations is positive also
for that period.
2. An increase in accounts receivable balance provides a decrease in cash
3. Balance sheets have traditionally recorded amounts i
1. When money is invested at compound interest, the growth rate is
the interest rate.
2. For a given amount, the lower the discount rate, the less the
3. Accrued interest declines with each payment on an amortizing
The Last but Not Least
WHAT WE DO AND DO NOT KNOW ABOUT FINANCE
1. WHAT WE DO KNOW: THE SIX MOST IMPORTANT IDEAS IN FINANCE
(1) Net Present Value
(2) Risk and Return
(3) Efficient Capital Markets
(4) MMs Irrelevance Propositions
(5) Option Theory
Chapter10 Assignments & Answers
9. At the break-even level of sales (60,000 units) profit
would be zero:
Profit = [60,000 (2 variable cost per unit)] 20,000
10,000 = 0
Variable cost per unit = $1.50.
13. Cash flow = net income + depreciation