FINAN 450 Test 3

Sunk

Cerda Diagnostics spent $5,000 last week repairing equipment. This week the company is trying to decide whether the equipment could be better utilized by assigning it to a proposed project. When analyzing the proposed project, the $5,000 should be treated as which type of cost?

Mutually exclusive

If a firm accepts project X it will not be feasible to also accept project Z because both projects would require the simultaneous and exclusive use of the same piece of machinery. These projects are considered to be:

That state project values for future time periods

Pro forma financial statements can best be described as financial statements:

Next Year's

The annual dividend yield is computed by dividing _____ annual dividend by the current stock price

Incremental Cash Flows

The difference between a firm's future cash flows if it accepts a project and the company's future cash flows if it does not accept the project is referred to as the project's:

Discount rate which causes the net present value of a project to equal zero

The internal rate of return is defined as the:

Payback period

The length of time a firm must wait to recoup the money it has invested in a project is called the:

Incremental

The stand-alone principle advocates that project analysis should be based solely on which of the following costs?

Lots of human involvement on the floors of the exchanges

Which of the following is NOT a characteristic of modern stock exchanges?

Common

Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings?

Increasing the project's initial cost at time 0

Which one of the following will decrease the net present value of a project?

Your order will not execute and will be places in the limit order book based on price, time priority

You own stock in company ABC and have decided to sell your shares. You place a limit sell order with a limit price of $68 when ABC is trading for $65. What will happen to your order when it arrives at the exchange?