Book: Principles of Managerial Finance 14th edition

Cap. 10 - 1, 2, 4, 6, 8 (Capital Budgeting Techniques)

Cap. 15 - 1, 4, 11, 12 (Working Capital and Current Assets Management)

REVIEW QUESTION 10-1 What is the financial manager's goal in selecting investment projects for the firm? Define the capital budgeting process, and explain how it helps managers achieve their goal. - REVIEW QUESTIONS 10-2 What is the payback period? How is it calculated? 10-3 What weaknesses are commonly associated with the use of the payback period to evaluate a proposed investment? mb o REVIEW QUESTIONS 10-4 How is the net present value (NPV) calculated for a project with a conventional cash flow pattern? 10-5 What are the acceptance criteria for NPV? How are they related to the 0aga firm's market value? 10-6 Explain the similarities and differences between NPV, PI, and EVA. nois - REVIEW QUESTIONS 10-8 What is the internal rate of return (IRR) on an investment? How is it determined? 10-9 What are the acceptance criteria for IRR? How are they related to the firm's market value? REVIEW QUESTIONS 15-1 Why is working capital management one of the most important and time-consuming activities of the financial manager? What is net work- ing capital? 15-2 What is the relationship between the predictability of a firm's cash in- flows and its required level of net working capital? How are net work- ing capital, liquidity, and risk of insolvency related? 15-3 Why does an in REVIEW QUESTIONS 15-4 What is the difference between the firm's operating cycle and its cash conversion cycle? 15-5 Why is it helpful to divide the funding needs of a seasonal business into its permanent and seasonal funding requirements when developing a funding strategy? 15-6 What are the benefits, costs, and risks of an aggressive funding strategy and of a conservative funding strategy? Under which strategy is the bor- rowing often in excess of the actual need? 15-7 Why is it important for a firm to minimize the length of its cash conver- sion cycle