Multiple-multiple choice ( each question can have 0,1,2,3,4 answers; 1 point for each correct answeron answer , +1 point for for a complete correct set)

S. The separation principle Q) maintains that the sources and uses of capital should be decided upon R) dictates that the cost of equity and cost of debt are separate and distinct S) dictates that the cost of equity and cost of debt are separate but not distinct T) states that the calculations of cash flows should remain independent of 6. Pro forma analysis is: U) analyzing only historical cash flows V) projecting future or projected cash flows, asking "what if we undergo a certain project and examining what impact it would have financially the relevant parts of the balance sheet and income statements impact of accepting the new project W) the process of estimating expected future cash flows of a project using only X) incorporating incremental cash flows of a potential project to determine the 7. Opportunity costs Y) exist whenever a firm has to choose how to allocate scarce resources Z) measures lost opportunities when deciding whether or not to accept a new project AA) a cost that has already been incurred and cannot be recovered BB) an expense that has already been paid or is obligated to be paid in the future, regardless of whether a particular project is undertaken 8. Sunk costs: exist whenever a firm has to choose how to allocate scarce resources measures lost opportunities when deciding whether or not to accept a new project a cost that has already been incurred and cannot be recovered an expense that has already been paid or is obligated to be paid in the FF) future, regardless of whether a particular project is undertaken 9. Operating Cash Flow GG) can only be positive HH must be negative II) EBIT (1-tax rate) Depreciation II) can be either negative or positive 10. Net Working Capital KK) has no impact on the fair value of a company's equity is a measurement of how much capital is needed to run the operations of a company MM) must be adjusted in looking at forecasted or future cash flows of a project NN) equals current assets less current liabilities