21.The company offering a discount on accounts payable is trying to ________ and the firm that pays on time rather than taking a discount is attempting to ________.

speed up cash inflow; slow down cash outflow

speed up cash outflow; slow down cash inflow

speed up cash outflow; slow down cash outflow

speed up cash inflow; slow down cash inflow

22. An aspect of short-term financial planning is forecasting operating cash flow and ultimately the profitability of the company in the coming period. This type of financial planning typically uses forecasted ________.

All of these

income statements

earnings

working capital statements

23. In their first venture into the optimal capital structure question, Nobel laureates Franco Modigliani and Merton Miller began with a very simple model and a hypothetical world of ________.

bankruptcy costs but no taxes

taxes but no bankruptcy

no taxes and no bankruptcy

both taxes and bankruptcy

24. 24

Dweller, Inc. is considering a four-year project that has an initial after-tax outlay or after-tax cost of $80,000. The future cash inflows from its project are $40,000, $40,000, $30,000 and $30,000 for years 1, 2, 3 and 4, respectively. Dweller uses the net present value method and has a discount rate of 12%. Will Dweller accept the project?

Dweller rejects the project because the NPV is -$3,021.

Dweller accepts the project because the NPV is greater than $30,000.

Dweller rejects the project because the NPV is less than -$4,000.

Dweller accepts the project because it has a positive NPV of over $28,000.

25. Which of the statements below is TRUE?

Investors want to minimize return and minimize risk.

Investors want to maximize return and maximize risk.

Investors want to maximize return and minimize risk.

Investors want to minimize return and maximize risk.

26. Which of the following is NOT a generally accepted way to remove ineffective management of a publicly traded firm?

Each of the above are recognized methods for the removal of ineffective management.

The shareholders can vote out directors who won't discipline managers.

The Board of Directors can vote to remove management.

Outside management teams can "take over" the company.

27. An investment of $100 today is worth $116.64 at the end of two years if it earns an annual interest rate of 8%. How much interest is earned in the first year and how much in the second year of this investment?

The interest earned in year one is $8.64 and the interest earned in year two is $8.00.

The interest earned in year one is $8.32 and the interest earned in year two is $8.32.

There is not enough information to solve this problem.

The interest earned in year one is $8.00 and the interest earned in year two is $8.64.

28.

Which of the statements below is FALSE?

The opportunity to make a profit without risk by exchanging three currencies is known as triple arbitrage.

Even if you could not do a direct exchange between pounds and yen, you could convert pounds to dollars and then dollars to yen and ultimately end up changing pounds into yen.

When cross rates are out of line, there can be an arbitrage opportunity.

Exchange rates vary from one day to the next.

29. Extending credit to a customer has three major components:

a policy on how customers will qualify for credit, a policy on the payment plan allowed creditors, and a policy on accounting for depreciation.

a policy on how customers will qualify for credit, a policy on the payment plan allowed creditors, and a policy for collecting overdue bills.

a policy on how customers will qualify for credit, a policy on paying commissions on sales, and a policy for collecting overdue bills.

a policy on how customers will qualify for credit, a policy on accounting for depreciation, and a policy on paying commissions on sales.