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51. An increase in the discount rate will a. reduce the present value of future cash flows b. increase the present value of future cash

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51. An increase in the discount rate will a. reduce the present value of future cash flows b. increase the present value of future cash flows c have no effect on net present value d. compensate for reduced risk Sa residual income? a Investment in common stock b. Cash c. Equipment d. Inventon These questions are 16 point each. Sam Rover purchased a used car for $10,000 at the beginning of last year and incurred the following costs. Insurance Garage rental Tax and license Variable operating cost (this is for gas, oil, tires) S960 $480 S60 $.08 per mile Sam must decide whether to rent a car for his vacation travel or use his own car. Cost to rent a car for I week For each question answer if relevant or not. $240 53. Insurance A. Relevant B. Not relevant 54. Garage rental A. Relevant B. Not relevant Tax and license A. Relevant B. Not relevant 55. 56. Variable operating cost A. Relevant B. Not relevant 57. Rental cost A. Relevant B. Not relevant Page 13

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