1) The investor should generally use the equity method of accounting for the investee if the investor owns what percentage of the outstanding stock of the investee? A) 0%-15% B) 20%-50% C) any percentage greater than 50% D) any percentage greater than 60% 2) Goodwill arises when a parent company: A) pays less to acquire a subsidiary company than the market value of the subsidiary's net assets B) pays more to acquire a subsidiary company than the market value of the subsidiary's net assets C) pays less to acquire a subsidiary company than the book value of the subsidiary's net assets D) pays more to acquire a subsidiary company than the book value of the subsidiary's net assets 3) A controlling interest is normally one where the investor: A) owns more than 20% of the investee's voting stock B) owns more than 50% of the investee's voting stock C) uses the equity method to account for the investment D) uses the market value method of accounting for the investment 4) A non-controlling interest arises only when a parent company purchases: A) less than 20% of the stock of a subsidiary company B) between 20% and 50% of the stock of a subsidiary company C) more than 50% but less than 100% of the stock of a subsidiary company D) all of the stock of a subsidiary company 5) Yukon Electrical Company owns all of the stock of Simmons Corporation and 80% of the stock of I-Tek Corporation. In 2017, Yukon earned net income of S450,000, Simmons earned $120,000, and I-Tek earned $180,000. Yukon's consolidated income statement would report consolidated net income of: A) $450,000 B) $570,000 C) $750,000 D) $714,000 6) The purchase of long-term investments would appear on a cash flow statement in the A) operating activities section B) investing activities section C) financing activities section D) would not appear on a cash flow statement 7) What is the present value of $520,000 expected to be received in three years' time, if the business concerned requires a return of 10% on sums invested? A) S620,000 B) $427,983 C) $472,893 D) $390,684 8) Assume that the interest rate is greater than zero. Which of the following cash-inflow streams totaling $1,500 would you prefer? The cash flows are listed in order for Year 1, Year 2, and Year 3 respectively? A) $700; $500; $300 B) $300; $500; $700 C) $500; S700; $300 D) Any of the Above as they all equal $1,500 9) _means current value of a future amount of money evaluated at a given interest rate? A) Compounding B) Nominal Rate C) Discounting D) Continuous Rate 10) All else constant, the net present value of a typical investment project increases when: A) The rate of return decreases. B) The initial cost of the project increases C) Each Cash flow is delayed for one year D) Discount Rate Increases