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Objective: Determine the present value of future cash flows from an investment. 1. Torvald's Hardware paid a contractor $45,000 to expand the store.

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Objective: Determine the present value of future cash flows from an investment. 1. Torvald's Hardware paid a contractor $45,000 to expand the store. The investment increased annual cash inflows by $8,000 per year six years. Torvald's has a desired rate of return of 10%. The net present value of this investment is which of the following? (round to the nearest dollar) A) ($10,160) B) ($3,000) C) $34,842 D) $(9,207) Objective: Differentiate among various capital budget evaluation techniques. 2. Which capital budgeting technique defines returns in terms of income instead of cash flows? A) the internal rate of return technique B) the net present value technique C) the unadjusted rate of return method D) the payback period Objective: Evaluate relevant financial information involved in a capital budgeting decision. 3. Tawanna is considering starting a small business. She plans to purchase equipment costing $145,000. Rent on the building used by the business will be $24,000 per year while other operating costs will total $30,000 per year. A market research specialist estimates that Tawanna's annual sales from the business will amount to $90,000. Tawanna plans to operate the business for 6 years. Disregarding the effects of taxes, what will be the amount of annual net cash flow generated by the business? A) $36,000 B) $54,000 C) $90,000 D) $125,000 Week Two: Cost Analysis Objective: Apply the concepts of cost estimation, cost driver, and cost allocation to a business situation. 4. Booker Company operates a factory with two departments, X and Y. The rent paid on the manufacturing facility would most likely be allocated to departments X and Y on the basis of: A) direct labor hours. B) machine hours. C) square footage. D) units sold. Objective: Use the techniques of job order and process costing to determine product cost. 5. Nadia Company uses a job order cost system. During the month of September, the company worked on three jobs. The job order cost sheets for the three jobs contained the following information at the end of September: The company applies overhead at 120% of direct labor cost. The total cost of Job A at the end of September was A) $5,140. B) $3,140.
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C) $8,140. D) $5,860. Objective: Integrate cost behavior concepts with cost-volume-profit (CVP) analysis. 6. How does the cost-volume-profit model accommodate non-linear costs and revenues? A) Non-linear costs and revenues are ignored by the model. B) Output volume is segregated into distinct ranges within which a linear relationship is expected to approximate the actual cost or revenue behavior. C) It is not a problem since non-linear costs and revenues do not exist in practice. D) It is not a problem since all costs are linear. Week Three: Management Planning and Control Objective: Construct elements of a master budget. 7. Oak Furniture provided the following information relevant to its sales for December 2007 and the first quarter of 2008: Based on the company's collection history, 2% of credit sales are uncollectible, 40% are collected in month of sale and the remainder collected in the following month. Cash collections in January from December 2007 credit sales would be A) $42,000 B) $40,600 C) $36,000 D) $34,800 Objective: Explain budget variances. 8. Shimano Company makes a product that is expected to require 2 hours of labor per unit of product. The standard cost of labor is $5.20. Shimano actually used 1.9 hours of labor per unit of product. The actual cost of labor was $5.10 per hour. Shimano made 1,000 units of product during the period. Based on this information alone, the labor price variance is A) $190 favorable. B) $190 unfavorable. C) $510 favorable. D) $510 unfavorable. Objective: Analyze financial ratios to measure business performance. 9. You are considering an investment in AT&T Company stock and wish to assess the company's position in the stock market. All of the following ratios can be used except: A) earnings per share. B) dividend yield. C) working capital. D) price-earnings ratio. Objective: Analyze nonfinancial measures to measure business performance. 10. Failure mode and effect analysis is used in six-sigma projects. It involves which of the following? A. Closely examining each rejected part to determine the cause B. A careful sampling plan C. Calculating a risk priority number for each possible failure D. Reporting the effect each failure has had on a customer
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1) An investment that costs $30,000 will produce annual cash flows of $10,000 for a period of 4
years. Given a desired rate of return of 8%, the investment will generate a (round your answer to

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