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Capital investment decisions involve investments in long-term operational assets.  TRUE OR FALSE?

If the accounting rate of return exceeds the required accounting rate of return, O A. invest in the capital asset. B. only invest if the payback period is also less than the required rate of return. O C. do not invest in the capital asset. OD. only invest if the payback period is also greater than the required rate of return.

Which of the following is a working capital management issue? O A. The choice of which long-term assets to purchase to meet the firm's business goals. O B. The appropriate amount of cash to hold. C. None of the above is a working capital management issue. O D. The proper mix of stocks and bonds to issue for financing assets.

Under-capitalization of a business entity causes: Select one from the following options. a situation when long-term assets are financed from short term financial resources. a situation when the respective business entity is spending more capital than it is able to gain. a situation when current assets are financed from long-term capital. a situation when long-term assets are financed from short term receivables. The minimum selling price in the short run can be set at the level of: Select one from the following options. variable cost total cost fixed cost O total cost and profit

A higher level of current net operating assets implies which one of the following?  a.It increases the level of available operating working capital.  b.It increases the need for operating working capital, which must be met by selling financial assets, borrowing money, raising equity, or retaining profits.  c.It does not affect financing needs.

Right Option?

All of the following are factors that may complicate capital investment analysis except a.changes in price levels b.sunk costs c.possible leasing alternatives d.federal income tax ramifications

Explain briefly what working capital and working capital management are and what they do. Explain the link between current asset policy and liquidity, profit, and risk as well as any other relevant factors. So, which policy do you believe to be the most beneficial?

Which of the following statements are true of investment in net working capital? More than one answer may be correct. Multiple select question. A firm supplies working capital at the beginning of a project and recovers it toward the end. A firm's investment in net working capital depends on the project's terminal cash flow. A firm's investment in project net working capital closely resembles a loan. Initial investment in inventories and accounts receivable decreases the need for net working capital.

Lists the long-term sources of financing used by companies to finance investment capital, in order from least to greatest cost, and explains what is the factor that causes one source of capital to be more or less expensive than the other sources.

Explain this concept: “The cost of capital depends primarily on the use of the funds, not the source.”

Capital investment (sometimes also referred to as capital budgeting) is a company’s contribution of funds toward the acquisition of long-lived (long-term or capital) assets for further growth. True / False

The optimal capital structure: a. Maximizes the value of equity but not the tax shield associated with debtb. Minimizes the tax shield associated with debtc. Maximizes the value of the company but not necessarily the tax shield associated with debtd. Maximizes the value of the company and the tax shield associated with debt

All of the following are sustainable methods businesses can use to raise capital (funding) except for________.A. borrowing from lendersB. selling ownership sharesC. profitable operationsD. tax refunds

A company calculates its discretionary financing needed and determines this amount of capital  cannot be raised at a reasonable cost. Which of the following would reduce the amount of discretionary financing needed?

Residual income is the excess of operating income over the cost of capitalassociated with the deployed assets. Following is information for foursegments. Experiment with alternative rates of the cost of capital by usingthe pick list choices associated with the boxed area. Note how the relativeresidual income changes between the units based on the interest rateassumption!What do you wish to assume for the interest rate? >>>> 0%Segment A Segment B Segment C Segment DOperating income $ 1,200,000 $ 1,000,000 $ 750,000 $ 500,000Operating assets $ 8,000,000 $ 4,000,000 $ 2,000,000 $ 600,000Assumed interest rate X 0 X 0 X 0 X 0Cost of Capital $ - $ - $ - $ -Residual income $ 1,200,000 $ 1,000,000 $ 750,000 $ 500,000   What would be the Residual Income of Segment A?         Flag question: Question 2 Question 21 pts What would be the Return on Asset (ROA) of Segment A in percentage? Note: To get a proper grade, for example, enter 0.35 if the ROA is 35%…

What is a capital investment and why do companies need to evaluate whether to make the investment or not?