Question
Please answer the following questions: 7) The internal rate of return is best described as that discount rate that: a. equates the NPV and IRR
Please answer the following questions:
7) The internal rate of return is best described as that discount rate that:
a. equates the NPV and IRR
b. makes the NPV equal zero
c. equals the required rate of return
d. equates all cash flows to the current market rate that:
8) Independent projects:
a. do not compete with each other
b. do compete with each other
c. can be mutually exclusive under certain conditions
d. always have negative NPVs
9. If a new machine requires an increase in current assets from $50,000 to $60,000 and current liabilities from $30,000 to $50,000, the dollar change in net working capital is:
a. negative
b. positive
c. zero
d. undefined
10) When the used asset is eventually sold for less than its depreciated book value:
a. then the difference is taxed as ordinary income
b. there are no tax effects
c. there is a capital gain tax
d. The firms tax liability is reduced by the amount of the difference times the ordinary income tax rate
11) The sales break-even point is defined as:
a. the level of sales that a firm must reach to cover fixed costs
b. the level of income that a firm must reach to cover variable costs
c. the level of sales that a firm must reach to cover all operating costs
d. the point where operating income equals fixed costs
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