1. The Net Present Value decision technique may not be the only pertinent unit of measure ifthe firm is facingA. a labor union.B. a major investment.C. time or resource constraints.D. the election of a new board of directors.2. Which rate-based decision statistic measures the rate of return, including the cost of capitalfor a project?A. Profitability Index, PIB. Net Present Value, NPVC. Internal Rate of Return, IRRD. Modified Internal Rate of Return, MIRR3. When looking at these types of projects, one must consider any cash flows that arise frominstalling the new equipment.A. newB. cost-cuttingC. incrementalD. replacementE. all of the above.4. Of the capital budgeting techniques discussed, which works equally well with normal andnon-normal cash flows and with independent and mutually exclusive project?A. payback periodB. net present valueC. discounted payback periodD. modified internal rate of return5. The approach to convert an infinite series of asset purchases into a perpetuity is known astheA. Net present value approachB. Net working capital approachC. Equivalent annual cost approachD. Equivalent annual cash flow approach6. Neither payback period nor discounted payback period techniques for evaluating capitalprojects accounts forA. riskB. time value of money.C. market rates of return.D. cash flows that occur after payback.

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Which of the following is an example of the agency problem? a. Managers always invest in projects that have appropriate returns and that will increase shareholder wealth. b. Managers resign when they believe they have not always acted in the best interests of shareholders. c. Managers conduct an acquisition program purely to increase the size of an organisation. d. Managers look for new projects as they want to avoid business risk. Clear my choice
Why might a manager focused solely on accounting numbers miss opportunities for future benefits?
An agency issue is most apt to develop when: O A. a firm encounters a period of stagnant growth. O B. a firm downsizes. O C. the control of a firm is separated from the firm's ownership. O p, the firm's owner is also its key manager. O E. a firm is structured as a general partnership.
1. Which of the following is an example of qualitative factors that can effect investment decisions? Select one: a. All of the choices b. Over time, how will the quality of goods produced impact the company financially? c. How will any changes affect worker productivity? Will they have any impact on employee morale? d. How will the proposed acquisition or upgrade affect the company’s flexibility?
The method by which a firm is being governed, directed, administered, or controlled is O a. corporate governance. O b. management. OC. management by objectives. d. management by decree. QUESTION 12 The group that is elected by shareholders to govern and oversee management is the O a. investment council. O b. board of directors. O C. board of trustees. O d., governing council.
How do you define working capital? What may happen if an organization neglected to manage its working capital? What techniques do you recommend for your organization? Why?
Breaking down resistance to a new strategic vision typically requires that management, on an as needed basis, Select one: O A. reiterate the company's need for the new direction, while addressing employee concerns head- on, calming fears, lifting spirits, and providing them with updates and progress reports as events unfold. O B. raise wages and salaries to win the support of company personnel for the company's new direction. O C. institute a balance scorecard to measuring company performance, with the balance including a mixture of both old and new performance measures. O D. explain all updates and merits of the company's business model to align strategy with employee concerns. O E. inform company personnel about forthcoming changes in the company's strategy.
Agency theory suggests that one way to motivate managers to act in the best interests of the owners/shareholders is to link managerial compensation to firms' payoffs, such as net income or share returns. However, such a linkage imposes risk on the manager. Required: (1) Why is it important to control or reduce some of the risk thus imposed on managers? Explain. Discuss two methods by which risk imposed on the managers could be reduced.
what is investment banker role in company?
CEO compensation design is effective in controlling the behavior in their decision making. How a compensation package could possibly work in adjusting a CEO’s risk taking behavior (in investments) and in balancing long-term vs. short term interests of a company?
Explain how knowledge of managerial accounting can assist a manager with regard to the following concerns: He is deciding whether to push through with a project. He is determining whether a branch is profitable or not. He is deciding whether to process a certain product further before selling. He would like to show to the Board of Directors how the business is financially performing and how cash is being used. He would like to plan for the year so that he will be prepared to deal with shortage of cash fund.
The tension between the interests of the CEO and the interests of long-term stakeholders helps to explain why: Group of answer choices A. Conflicts of interest can easily happen. D. Both A & B B. Boards of directors need to maintain their independence from executives. C. Absence of agency risk is apparent.

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the firm is facing A. a labor union. B. a major investment. C. time or resource constraints. D. the election of a new board of directors.