Homework Assignment #12 Chapter Twelve
1. Which of the following is NOT a relevant cash flow and thus should not be reflected in the analysis of a
capital budgeting project?
Changes in net working capital.
Shipping and installation costs.
Homework Assignment #11 Chapter Eleven
Which of the following statements is CORRECT? Assume that the project being considered has normal
cash flows, with one outflow followed by a series of inflows.
a. A projects regular IRR is found by compounding the
Homework Assignment #4 Chapters Four
Considered alone, which of the following would increase a companys current ratio?
a. An increase in net fixed assets.
b. An increase in accrued liabilities.
c. An increase in notes payable.
d. An increase in account
Homework Assignment #6 Chapter Six
Assume that interest rates on 20-year Treasury and corporate bonds are as follows:
T-bond = 7.72%
AAA = 8.72%
A = 9.64%
BBB = 10.18%
The differences in these rates were probably caused primarily by:
a. Tax effects.
Homework Assignment #10 Chapter Ten
1. Which of the following is NOT a capital component when calculating the weighted average cost of capital
(WACC) for use in capital budgeting?
a. Long-term debt.
b. Retained earnings
c. Common stock.
d. Accounts payabl
Homework Assignment #2 Chapter Two
You recently sold 100 shares of Microsoft stock to your brother at a family reunion. At the reunion your
brother gave you a check for the stock and you gave your brother the stock certificates. Which of the
Homework Assignment #1 Chapter One
Which of the following could explain why a business might choose to operate as a corporation rather
than as a sole proprietorship or a partnership?
a. Corporations generally face fewer regulations.
b. Less of a corpor
Homework Assignment #7 Chapter Seven
Which of the following events would make it more likely that a company would call its outstanding
a. Inflation increases significantly.
b. The companys bonds are downgraded.
c. Market interest rates
Homework Assignment #8 Chapter Eight
When comparing two equal-sized investments, the _ is an appropriate measure of total risk.
Coefficient of variation
2. Beta is defined as:
a. a measure of volati
Homework Assignment #9 Chapter Nine
Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in
equilibrium, which of the following statements is CORRECT?
Homework Assignment # 5 Chapter Five
You plan to analyze the value of a potential investment by calculating the sum of the present values of
its expected cash flows. Which of the following would lower the calculated value of the investment?
a. The cash
Homework Assignment #3 Chapter Three
Other things held constant, which of the following actions would increase the amount of cash on a
companys balance sheet?
a. The company repurchases common stock.
b. The company pays a dividend.
c. The company issue