1.True or flase . Even thugh thr amounts and timing of the cash flow may differ, the appropiate LCM rate makes equal in economic sense. 2. true or false. when only costs are involed. The AE method is called the project equivalent cost? 3. true or false. the cost fro a depreciable asset is the invoice cost fot he asset

1.True or flase . Even thugh thr amounts and timing of the cash flow may differ, the appropiate LCM rate makes equal in economic sense. 2. true or false. when only costs are involed. The AE method is called the project equivalent cost? 3. true or false. the cost fro a depreciable asset is the invoice cost fot he asset

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A characteristic of the payback method is that it: (See your Chapter 25 notes, page 9) Uses accrual accounting inflows in the numerator of the calculation Uses the estimated expected useful life of the asset in the denominator of the calculation Incorporates cash flows received after the payback period has been reached Is based on accounting income Incorporates the time value of money Ignores total project profitability
For a capital investment project to be acceptable, it must generate a rate of return A) Less than the required rate of returnB) Equal to or greater than the cost of capitalC) equal to the initial investmentD) none of the above
What is not a disadvantage of using the Payback Period Method? Hard to calculate O Ignores time value of money Uses an arbitrary benchmark O Biased against long term project None of the above
Define each of the following terms:b. Incremental cash flow; sunk cost; opportunity cost; externality; cannibalization; expansion project; replacement project
The weighted average cost of capital is used to determine whether or not a project should be done. true false
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Hi, number 3 still appears to be unanswered for this problem. How do you determine relevant cash flow (after-tax) at project disposal (termination)?
Which of the following statements is true regarding the payback period? Multiple Choice It measures the length of time that it takes for a project to recover its initial cost from the discounted net cash inflows that it genera It measures the length of time that it takes for a project to recover its initial cost from the net cash inflows that it generates. It measures the length of time that it takes for a project to recover its initial cost from the incremental net operating income that It measures the length of time that it takes for a project to recover its initial cost from the discounted incremental net operating it generates.
13.Concerning incremental project cash flow, this is a cost one would never count as a cash flow of the project. A. taxes paid B. financing costs C. initial investment D. operating expenses of the project
Cash flows that are directly associated with a project are called O sunk costs. terminal costs. incremental cash flows. current cash flows.
In the unrealistic situion in which the cost of capital were zero, the NPV of the project
1. Which of the following should be included in the initial outlay? A. Purchase price of new equipmentB. Increased working capital requirementsC. Pre-existing firm overhead reallocated to the new projectD. A and B above 2. Which of the following is NOT included in the calculation of the initial outlay for a capitalbudget? A. Additional working-capital investmentsB. Training expensesC. InstallationD. All is included in the initial outlay 3. Dividend policy is influenced by: A. a firm's capital structure mix.B. a company's investment opportunities.C. a company's availability of internally generated funds.D. all of the above. 4.Which of the following dividend policies will cause dividends per share to fluctuate themost? A. Stable dollar dividendB. Constant dividend payout ratioC. Small, low, regular dividend plus a year-end extraD. No difference between the various dividend policies 5.Which of the following statements would be consistent with the bird-in-the-hand dividendtheory? A.…