1. Risk in a revenue producing project can best be adjusted for by

a. Ignoring it.

b. Adjusting the IRR downward for increasing risk.

c. Adjusting the required rate downward for increased risk.

d. Picking a risk factor equal to the average discount rate.

e. Increasing the NPV by 10 percent for risky projects.

2. Express Press evaluates many different capital budgeting projects each year. The risks of the projects often differ significantly, from very little risk to risks that are substantially greater than the average risk associated with the firm. If Express Press always uses its weighted average cost of capital, or average required rate of return, to evaluate all of these capital budgeting projects, then the company might make an incorrect decision, or a mistake, by

a. accepting projects that actually should be rejected.

b. accepting projects with internal rates of return that are too high.

c. rejecting projects that actually should be rejected.

d. rejecting projects with internal rates of return that are lower than the

appropriate risk-adjusted required rate of return.

e. accepting project that actually should be accepted.

3.Firms following a relaxed current asset policy are likely to __________ holdings of cash and have a __________ credit policy on sales.

a. have large; conservative b. minimize the; conservative c. havelarge;liberal d. minimize the; liberal e. have zero; liberal

4. A firm following an aggressive approach to working capital policy will finance all of the fixed assets with __________, and some of the firm's permanent current assets will be financed with __________.

a. short-term nonspontaneous sources of funds; long term capital

b. commercial paper; long term capital

c. long term capital; short-term nonspontaneous sources of funds

d. long term capital; corporate bonds

e. short-term nonspontaneous sources of funds; corporate bonds

5. The amount of checks that have been received and deposited but have not yet been made available to the account in which they were deposited is the __________ float.

a. disbursement b. net c. collections d. balance

e. deposit

6. A report showing how long accounts receivable have been outstanding is called what?

a. Time line. b. Preauthorized debit system.

c. Aging schedule. d. Cash discount. e. Credit period.