公司理財(cái)精要第九章題庫(kù)

1、chapter 09 - making capital investment decisionschapter 09making capital investment decisions  multiple choice questions 1. any changes to a firm's projected future cash flows that are caused by adding a new project are referred to as which one of the following? a. erode

2、d cash flowsb. deviated projectionsc. incremental cash flowsd. directly impacted flowse. assumed flows 2. which one of the following principles refers to the assumption that a project will be evaluated based on its incremental cash flows? a. forecast assumptio

3、n principleb. base assumption principlec. fallacy principled. erosion principlee. stand-alone principle 3. a cost that should be ignored when evaluating a project because that cost has already been incurred and cannot be recouped is referred to as which type of cost?

4、60;a. fixedb. forgottenc. variabled. opportunitye. sunk 4. which one of the following terms refers to the best option that was foregone when a particular investment is selected? a. side effectb. erosionc. sunk costd. opportunity coste. 

5、;marginal cost 5. which one of the following terms is most commonly used to describe the cash flows of a new project that are simply an offset of reduced cash flows for a current project? a. opportunity costb. sunk costc. erosiond. replicated flowse. pirated f

6、lows 6. a pro forma financial statement is a financial statement that: a. expresses all values as a percentage of either total assets or total sales.b. compares actual results to the budgeted amounts.c. compares the performance of a firm to its industry.d. projects

7、 future years' operations.e. values all assets based on their current market values. 7. the amount by which a firm's tax bill is reduced as a result of the depreciation expense is referred to as the depreciation: a. tax shield.b. credit.c. erosion.d. o

8、pportunity cost.e. adjustment. 8. which one of the following refers to a method of increasing the rate at which an asset is depreciated? a. non-cash expenseb. straight-line depreciationc. depreciation tax shieldd. accelerated cost recovery systeme. market

9、 based depreciation 9. forecasting risk is best defined as: a. reality risk.b. value risk.c. potential risk.d. management risk.e. estimation risk. 10. jamie is analyzing the estimated net present value of a project under various what if scenarios. th

10、e type of analysis that jamie is doing is best described as: a. sensitivity analysis.b. erosion planning.c. scenario analysis.d. benefit planning.e. opportunity evaluation. 11. mark is analyzing a proposed project to determine how changes in the variable costs

11、 per unit would affect the project's net present value. what type of analysis is mark conducting? a. sensitivity analysisb. erosion planningc. scenario analysisd. cost-benefit analysise. opportunity cost analysis 12. the opportunities that a manager has to

12、 modify a project once it has started are called: a. sensitivity choices.b. managerial options.c. scenario adjustments.d. restructuring options.e. erosion control measures. 13. contingency planning focuses on the: a. opportunity costs involved with a

13、 project.b. sunk costs related to a project.c. economic effects on a project's profitability.d. managerial options implicit in a project.e. optional capital requirements of a project. 14. which one of the following refers to the option to expand into related busines

14、ses in the future? a. strategic optionb. contingency optionc. soft rationingd. hard rationinge. capital rationing option 15. kyle electric has three positive net present value opportunities. unfortunately, the firm has not been able to find financing for any o

15、f these projects. which one of the following terms best describes the firm's situation? a. sensitivity analysisb. capital rationingc. soft rationingd. contingency planninge. sunk cost 16. marcos enterprises has three separate divisions. the firm allocates

16、each division $1.5 million per year for capital purchases. which one of the following terms applies to this allocation process? a. soft rationingb. hard rationingc. opportunity costd. sunk coste. strategic planning 17. the blackwell group is unable to obtain f

17、inancing for any new projects under any circumstances. which term best applies to this situation? a. contingency planningb. soft rationingc. hard rationingd. sensitivity analysise. scenario analysis 18. the shoe box is considering adding a new line of winter f

18、ootwear to its product line-up. which of the following are relevant cash flows for this project?i. decreased revenue from products currently being offered if this new footwear is added to the lineupii. revenue from the new line of footweariii. money spent to date looking for a new product line to ad

19、d to the store's offeringsiv. cost of new counters to display the new line of footwear a. i and iv onlyb. ii and iv onlyc. ii and iii onlyd. i, ii, and iv onlye. ii, iii, and iv only 19. lake city plastics currently produces plastic plates and silverware.

20、the company is considering expanding its product offerings to include plastic serving trays. which of the following are cash flows relevant to the new product?i. molds needed to form the serving traysii. projected increase in plate and silverware sales if the trays are producediii. a portion of the

21、production manager's current annual salary of $75,000iv. raw materials used in the production of the serving trays a. i and iv onlyb. iii and iv onlyc. i, ii, and iv onlyd. i, iii, and iv onlye. i, ii, iii, and iv 20. the corner market has decided to expan

22、d its retail store by building on a vacant lot it currently owns. this lot was purchased four years ago at a cost of $299,000, which the firm paid in cash. to date, the firm has spent another $38,000 on land improvements, all of which was also paid in cash. today, the lot has a market value of $329,

23、000. what value should be included in the analysis of the expansion project for the cost of the land? a. the sum of the cash paid to date for both the lot and the improvementsb. the original purchase price onlyc. the current market value of the land plus the cash paid for the imp

24、rovementsd. the current market value of the lande. zero because the land and the improvements were purchased with cash 21. weston steel purchased a new coal furnace six years ago at a cost of $2.2 million. last year, the government changed the emission requirements and this furna

25、ce cannot meet those standards. thus, weston's can no longer use the furnace nor have they been able to locate anyone willing to purchase the furnace. given the current situation, the furnace is best described as which type of cost? a. erosionb. bookc. sunkd. markete.

26、60;opportunity 22. valley forge and metal purchased a truck five years ago for local deliveries. which one of the following costs related to this truck is the best example of a sunk cost? assume the truck has a usable life of eight years. a. new tires that will be purchased this

27、winterb. costs of repairs needed so the truck can pass inspection next monthc. money spent last month repairing a damaged front fenderd. engine tune-up that is scheduled for this afternoone. cost for a truck driver for the remainder of the truck's useful life 23. th

28、e managers of h.r construction are considering remodeling plans for an old building the firm currently owns. the building was purchased 8 years ago for $689,000. over the past 8 years, the firm rented out the building and used the rent to pay off the mortgage. the building is now owned free and clea

29、r and has a current market value of $898,000. the firm is considering remodeling the building into a conference centre and sandwich bar at an estimated cost of $1.7 million. the estimated present value of the future income from this centre is $2.9 million. which one of the following defines the oppo

30、rtunity cost of the remodeling project? a. initial cost of the buildingb. cost of the remodelingc. current market value of the buildingd. initial cost of the building plus the remodeling costse. current market value of the building plus the remodeling costs 24.

31、0;bruce moneybags owns several restaurants and hotels near a local interstate. one restaurant, beef and more, needs modernized. he is trying to decide whether to accept an offer and sell beef and more as is for the offer price of $1.1 million or renovate the restaurant himself. the projected renovat

32、ion cost is $1.3 million. the restaurant would need to be shut down completely during the renovation which would cause a net operating cash flow loss of $210,000 in today's dollars. the estimated present value of the cash inflows from the renovated restaurant are $3.2 million. when analyzing the

33、 renovation project, what opportunity cost, if any should be included for the current restaurant? assume the restaurant is totally paid for and any future costs will be paid in cash. a. there is no opportunity cost since the current restaurant is owned free and clear.b. the opportunit

34、y cost is the value of the current offer to buy the restaurant.c. the opportunity cost is the cost of the needed improvements.d. the opportunity cost is the present value of the loss of operating cash flows while the restaurant is closed for renovation.e. the opportunity cost is the c

35、ost of the renovations plus the loss of the operating cash flows during the renovation. 25. isabella is considering three mutually exclusive options for the additional space she just added to her specialty women's store. the cost of the expansion was $127,000. she can use this addition

36、al space to add a fabric and quilting section, add an exclusive gifts department, or expand into imported decorator items for the home. she estimates the present value of these options at $114,000 for fabric and quilting, $163,000 for exclusive gifts, and $138,000 for decorator items. which option(s

37、), if any, should isabella accept? a. none of the optionsb. fabric and quilting onlyc. exclusive gifts onlyd. exclusive gifts and decorator items onlye. all three options 26. steve owns a store that caters primarily to men and their hobbies. he is contemplatin

38、g greatly expanding the hunting and fishing section of the store. if he does this, he expects his fishing and hunting sales will increase, his camping gear sales will increase, and his model train sales will decrease. which of the following should steve include in his revenue projection for the expa

39、nsion project?i. increase in fishing and hunting salesii. increase in camping gear salesiii. decrease in model train sales a. i onlyb. ii onlyc. i and iii onlyd. ii and iii onlye. i, ii, and iii 27. lakeside rides is adding a new roller coaster to its amusemen

40、t park. the firm expects this addition to increase its overall ticket sales and increase attendance at its park. in particular, the firm expects to sell more tickets for its current roller coaster and experience extremely high demand for its new coaster. sales for its boat ride are expected to decli

41、ne but food and beverage sales are expected to increase significantly. which of the following are considered side effects associated with the new roller coaster?i. ticket sales for the new roller coasterii. change in ticket sales for the existing coasteriii. change in ticket sales for the boat ridei

42、v. change in food and beverage sales a. i onlyb. iii onlyc. ii and iii onlyd. i, ii, and iii onlye. ii, iii, and iv only 28. which of the following should be included in the analysis of a proposed investment?i. erosion effectsii. opportunity costsiii. sunk cos

43、tsiv. side effects a. i onlyb. ii onlyc. i and iv onlyd. i, ii, and iv onlye. i, ii, iii, and iv 29. the net working capital invested in a project is generally: a. a sunk cost.b. an opportunity cost.c. recouped in the first year of the proj

44、ect.d. recouped at the end of the project.e. depreciated to a zero balance over the life of the project. 30. a proposed project will increase a firm's accounts payables. this increase is generally: a. treated as an erosion cost.b. treated as an opportunity cost

45、.c. a sunk cost and should be ignored.d. a cash outflow at time zero and a cash inflow at the end of the project.e. a cash inflow at time zero and a cash outflow at the end of the project. 31. which of the following are cash inflows from net working capital?i. increase in ac

46、counts payableii. increase in inventoryiii. decrease in accounts receivableiv. decrease in fixed assets a. ii onlyb. iii onlyc. i and iii onlyd. iii and iv onlye. i, ii, and iii only 32. which of the following should be included when compiling pro forma statem

47、ents for a proposed investment?i. forecasted salesii. start-up costsiii. aftertax salvage value of any assets soldiv. anticipated changes in net working capital a. i onlyb. ii and iv onlyc. i, ii, and iii onlyd. ii, iii, and iv onlye. i, ii, iii, and iv 33. fi

48、rm a uses straight-line depreciation. firm b uses macrs depreciation. both firms bought $60,000 worth of equipment last year. both firms are in the 35 percent tax bracket. the operating cash flows for each firm are identical except for the depreciation effects. given this, you know the: a. 

49、;depreciation expense for firm a will be greater than firm b's expense every year.b. equipment has a higher value on firm b's books than on firm a's at the end of year two.c. operating cash flow of firm a is less than that of firm b for year two.d. market value of firm a&#

50、39;s equipment is greater than the market value of firm b's equipment.e. market value of firm b's equipment is greater than the market value of firm a's equipment. 34. assume a firm has positive net earnings. the operating cash flow of this firm: a. ignores both

51、depreciation and taxes.b. is unaffected by the depreciation expense.c. must be negative.d. increases when tax rates decrease.e. is equal to net income minus depreciation. 35. the operating cash flows of a project: a. are unaffected by the depreciation method s

52、elected.b. are equal to the project's total projected net income.c. decrease when net working capital increases.d. include any aftertax salvage values.e. include erosion effects. 36. the tax shield approach to computing the operating cash flow, given a tax-paying fi

53、rm: a. ignores both interest expense and taxes.b. separates cash inflows from cash outflows.c. considers the changes in net working capital resulting from a new project.d. is based on the fact that depreciation does not affect the operating cash flows.e. recognizes that

54、 depreciation creates a cash inflow. 37. which one of the following will increase the operating cash flow as computed using the tax shield approach? a. decrease in depreciationb. decrease in salesc. increase in variable costsd. decrease in fixed costse. increa

55、se in the tax rate 38. scenario analysis is best described as the determination of the: a. most likely outcome for a project.b. reasonable range of project outcomes.c. variable which has the greatest effect on a project's outcome.d. effect that a project's

56、initial cost has on the project's net present value.e. change in a project's net present value given a stated change in projected sales. 39. which one of the following is a correct value to use if you are conducting a best case scenario analysis? a. sales price that

57、is most likely to occurb. lowest expected level of sales quantityc. lowest expected salvage valued. highest expected need for net working capitale. lowest expected value for fixed costs 40. scenario analysis asks questions such as: a. how will changing the num

58、ber of units sold affect the outcome of this project?b. what is the best outcome that should reasonably be expected?c. how much will a $1 increase in the variable cost per unit change the net present value?d. will the net present value increase or decrease if the quantity sold increas

59、es by 100 units?e. how will the operating cash flow change if the depreciation method is changed? 41. scenario analysis: a. determines the impact a $1 change in sales has on the internal rate of return.b. determines which variable has the greatest impact on a project

60、9;s net present value.c. helps determine the reasonable range of expectations for a project's anticipated outcome.d. evaluates a project's net present value while sensitivity analysis evaluates a project's internal rate of return.e. determines the absolute worst and absolu

61、te best outcome that could ever occur. 42. sensitivity analysis: a. looks at the most reasonably optimistic and pessimistic results for a project.b. helps identify the variable within a project that presents the greatest forecasting risk.c. is used for projects that can

62、not be analyzed by scenario analysis because the cash flows are unconventional.d. is generally conducted prior to scenario analysis just to determine if the range of potential outcomes is acceptable.e. illustrates how an increase in operating cash flow caused by changing both the revenue a

63、nd the costs simultaneously will change the net present value for a project. 43. turner industries started a new project three months ago. sales arising from this project are exceeding all expectations. given this, which one of the following is management most apt to implement? a. option to waitb. soft rationingc. strategic optiond. option to abandone. option to expand 44. ignoring the option to wait: a. may overestimate the internal rate of return on a project.b. may underesti