Which of the following statement is correct about cost-benefit analysis? O A. Costs and benefits must be put into common units (such as dollars) if they are to be compared. O B. In general, if an action increases a firm's value by providing benefits with a value greater than any costs involved, then that action is not good for the firm's investors. OC. In order for costs and benefits to be compared, they must typically be converted to common units but not converted to the same point in time. O D. A financial manager's decisions should provide benefits to the firm without incurring any costs.

Which of the following statement is correct about cost-benefit analysis? O A. Costs and benefits must be put into common units (such as dollars) if they are to be compared. O B. In general, if an action increases a firm's value by providing benefits with a value greater than any costs involved, then that action is not good for the firm's investors. OC. In order for costs and benefits to be compared, they must typically be converted to common units but not converted to the same point in time. O D. A financial manager's decisions should provide benefits to the firm without incurring any costs.

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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The profit maximizing condition for a purely competitive firm is when. Price elasticity of demand is positive. Price average total costs O Price - average total costs
2. Refer to the following table for the following questions. [2 x 4 (a) Explain one reason why gross profit margin of Firm-B is lower than that of Firm-A. (b) Suggest one possible way how Firm-B might improve its gross profit margin. (c) Explain one reason why net profit margin of Firm-A is lower than that of Firm-B. (d) Suggest one possible way how Firm-A might improve its net profit margin. Firm-A Firm-B Gross profit margin 52% 47% Net profit margin 29% 35%
6. The difference between money and income is A) money is a flow variable and income is a stock variable. B) money is a flow variable and income is a stock variable. C) there is no difference, money and income are both stock variables. D) there is no difference, money and income are both flow variables. 7. Conversion of the barter economic system into an economic system that uses money as a medium of payment.... A) increase efficiency by reducing the need to exchange goods and services. B) increase efficiency by reducing the need to specialize. C) increase efficiency by reducing transaction costs. D) does not increase economic efficiency.
What is the investment center manager's preferred technique of calculating investment turnover, residual income, and return on investment? Why is it so popular? And why is the other not preferred? Briefly explain.
Financial analysts have developed two performance measures: Market Value Added (MVA) and Economic Value Added (EVA). Discuss and explain both. Which is a better representative of the firm’s performance, and why?
Which of the following statements is false? Multiple Choice In general, the term expense is used for managerial purposes, while the term cost refers to external financial reports. An opportunity cost is the benefit forgone by selecting one alternative over another. An outlay cost is a past, present, or future cash outflow. A cost is a sacrifice of resources.
i.“Differential Costs” are considered as relevant, where as “sunk Cost ” is considered asirrelevant for decision making purposes. Explain ii. Why opportunity cost is measured and relate with the evaluation of alternative, can it bean opportunity loss? iii. Which one either spoiled goods or defective goods are less economical for the companyand why?
Standard cost system provides companies with a number of advantage and argue the statment ?
Which of the following is not an application of cost-volume-profit analysis? Setting prices for products and services. Performing strategic “what-if” analyses. Deciding whether to cut a product line. Determining the short-term cost or profit implications of many decisions. Deciding whether to make or buy a given product or service.
The concept of present worth allows engineers to convert costs and benefits to an equivalent value at a defined point in time Select one: True False
Which of the following statements are false? SELECT ALL THAT APPLY a. One of the dangers of allocating common fixed costs to a product line is that such allocations can make the line appear less profitable than it really is. b. A new fixed cost that must be paid if a special offer is accepted is not relevant in making the decision. c. A cost that will be incurred regardless of which course of action a manager takes is relevant to the manager's decision. d. Your Company is considering replacing Machine X. The original cost of Machine X is not relevant to this decision.
What is the investment center manager's preferred method for determining investment turnover, residual income, and return on investment? Why is it so popular? And why is the other not preferred? Briefly explain.

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