multiple choice

1)LasalleIndustriesisconsideringthepurchaseofanewmachinethatwillcost$250,000,plusanadditional$10,000toshipandinstall.Thenewmachinewillhavea5-yearusefullifeandwillbedepreciatedtozerousingthestraight-linemethod.Themachineisexpectedtohaveasalvagevalueof$30,000attheendofyearfive.LaSallesincometaxrateis40%.Theadditionalnetworkingcapitalfromthisprojectof$50,000isexpectedtoreturntoitspre-projectlevelupontermination.Whatisthenon-operatingterminalcashflowofthemachine?

A)-$32,000B)$48,000C)$80,000D)$68,000

2)Ifafirmhasnooperatingleverageandnofinancialleverage,thena10%increaseinsaleswillhavewhateffectonEPS?

A)EPSwilldecreaseby10%.B)EPSwillincreaseby10%.

C)EPSwillremainthesame.D)EPSwillincreasebylessthan10%.

3)Usingthepercentofsalesmethodandassumingthatnoexcesscapacityexists,a20%increaseinsaleswillresultin

A)a20%increaseintotalliabilities.

B)a20%increaseinretainedearnings.

C)a20%increaseintotalassets.

D)a20%increaseinthecompanysprofitmargin.

4)MarleyFinancialplanstosell$50,000,000of120-daycommercialpaper,onwhichitexpectstopaydiscountedinterestatarateof5%peryear.Dealerfeesareexpectedtobe$30,000.TheeffectivecostofcredittoMarleyFinancialis

A)5.27%.B)6.22%.C)7.53%.D)5.64%.

5)Money-markethedgesandforward-markethedgesrelyonthe

A)capitalassetpricingmodel.B)interestrateparitytheory.

C)purchasingpowerparitytheory.D)lawoflargenumbers.

6)Acompanyisexpandingandhasalreadysignedaleaseonnewofficespacethatcosts$10,000permonth.Thecompanyalsoneedsanewinformationsystemandhiredaconsultanttorecommendnewsoftware.Theconsultantwaspaid$5,000forherrecommendation.Nowthecompanyistryingtomakeachoicebetweenthreecompetingsoftwareproducts.Inthecapitalbudgetingdecisiontopurchasenewsoftware,themonthlyrentfortheofficespaceis________andtheconsultantsfeeis________.

A)anopportunitycost;asunkcost

B)asunkcost;apartoftheinitialoutlay

C)incrementalcashoutflow;anopportunitycost

D)asunkcost;asunkcost