multiple choice take home quiz need answers in about 30 minutes

CHAPTER 13 Quiz Name:_________________________ Multiple Choice (5 points each) ABC Homes builds homes in New York/New Jersey area. They build homes which are priced between $400,000 and $950,000. The following is a table indicating the company's expected sales forecast for different economic scenarios. Use the following table to answer Questions 1 - 5. Probability Higher-Priced Homes Unit Sales Avg. Price per Home Total Revenues Medium-Priced Homes Unit Sales Avg. Price per Home Total Revenues Lower-Priced Homes Unit Sales Avg. Price per Home Total Revenues Total Revenues for Each Scenario Scenario 1 (Recession) Scenario 2 (Normal Economy) Scenario 3 (Booming Economy) 25% 50% 25% 8 $950,000 ? 35 $950,000 $33,250,000 55 $950,000 $52,250,000 35 $700,000 $24,500,000 ? $700,000 $38,500,000 70 $700,000 $49,000,000 65 $400,000 $26,000,000 ? 80 $400,000 $32,000,000 $103,750,000 95 $400,000 ? $139,250,000 1. What are the expected revenues from Higher-Priced Homes in a Recession for ABC Homes? a. $ 950,000 b. $ 7,600,000 c. $24,500,000 d. $26,000,000 2. What are the Total Revenues expected in a recession? a. $24,500,000 b. $26,000,000 c. $58,100,000 d. $62,700,000 3. How many Medium-Priced homes does the company expect to sell in a Normal Economy ? a. b. c. d. 35 55 65 75 4. What are the Total Revenues expected from Lower-Priced homes in a Booming Economy? a. $38,000,000 b. $42,000,000 c. $49,000,000 d. $52,250,000 5. What are the Expected Revenues for ABC Homes for the year? a. $101,212,500 b. $210,750,000 c. $275,650,250 d. $301,100,000 Use the following table to answer questions 6 - 9 (Discount rate = 20%). Year 0 Revenues Less: Variable cost Less: Fixed cost Less: Depreciation Net operating Income Less: Taxes (30%) NOPAT Plus: Depreciation Less: Increase in CAPEX Less: Increase in NOWC Free Cash Flow (FCF) $(1,500,000) $(500,000) $(2,000,000) Year 1 $5,000,000 (3,500,000) (500,000) (500,000) 500,000 (150,000) 350,000 500,000 $850,000 Year 2 $5,000,000 (3,500,000) (500,000) (500,000) 500,000 (150,000) 350,000 500,000 $850,000 Year 3 $5,000,000 (3,500,000) (500,000) (500,000) 500,000 (150,000) 350,000 500,000 500,000 500,000 $1,850,000 6. What is the NPV of the project? a. $312,786.23 b. $369,212.96 c. $408,714.24 d. $423,490.82 7. What would be the NPV of the project if the Revenues declined by 10% (assume everything else remains the same)? a. $(287,650.40) b. $(295,345.73) c. $(345,820.37) d. $(368,055.56) 8. What would be the NPV of the project if the Variable Cost increased by 10%? (Revenues remain the same at $5,000,000 per year). a. $(146,875.00) b. $(189,354.62) c. $(210,421.34) d. $(234,825.96) Use the following information to answer Questions 9 and 10. Unit Sales: Price per unit: Variable cost per unit: Fixed cost per year: Depreciation: 500,000 $100 $80 $900,000 $400,000 9. What is the accounting break-even number of units? a. 45,000 b. 52,000 c. 65,000 d. 73,000 10. What is the cash break-even number of units? a. 37,000 b. 45,000 c. 52,000 d. 65,000 11. Cash flows used in the calculation of project NPV are known as: a. expected values b. variable costs c. fixed costs d. random values 12. Basic determinants of an investment's cash flows are known as: a. overhead costs b. value drivers c. fixed costs d. indeterminate drivers 13. Financial managers conduct __________ to evaluate the effect of each value driver on an investment's NPV. a. surveys b. polls c. sensitivity analysis d. case analysis 14. An increase in revenues would be considered a __________ value driver. a. positive b. negative c. neutral d. cannot be determined without more information 15. An increase in variable cost would be considered a __________ value driver. a. positive b. negative c. neutral d. cannot be determined without more information 16. Financial managers conduct __________ to evaluate the effect of changes in multiple value drivers on a project's NPV. a. sensitivity analysis b. scenario analysis c. simulation analysis d. survey analysis 17. __________ provides analysts with thousands of estimates of NPV, built upon thousands of values for each of the investment's value drivers. a. Sensitivity analysis b. Scenario analysis c. Simulation analysis d. Survey analysis 18. __________ takes depreciation in consideration when calculating the break-even analysis. a. Cash break-even b. Accounting break-even c. Expected value break-even d. Strategic break even 19. __________ does not take depreciation in consideration when calculating the break-even analysis. a. Cash break-even b. Accounting break-even c. Expected value break-even d. Strategic break even 20. A decrease in the availability of a competing product would most likely lead your company to choose the a. abandonment option b. contraction option c. delay option d. expansion option