B3

which of the following changes would result in the highest present value for a series of cash flows

a 100 decrease in taxes each year for four years

the collection of accounts receivable can be accelerated by the use of

a lockbox system

the level of safety stock in inventory management depends on all of the following except

cost to reorder stock

which of the following events would decrease the internal rate of return of a proposed asset purchase

decrease tax credits on the asset **investment/ cash flow= pv factor a decrease in tax credits associated with an asset would increase the initial investment.

commercial paper

does not have an active secondary market

when employing the MACRS method of depreciation in a capital budgeting decision, the use of MACRS as compared to the straight-line method of depreciation will result in

equal total deppreciation for both methods

equity financing using the capital asset pricing model would incorporate only the

expected market earnings, the current u.s. treasury bond yield, and the beta coefficient

capital budgeting decisions include all but which of the following

financing short-term working capital needs

a company uses its company wide-cost of capital to evaluate new capital investments. what is the implication of this policy when the company has multiple operating divisions, each having unique risk attributes and capital costs?

high risk divisions will over invest in new projects, and low risk divisions will under-invest in new projects.

the NPV of a project has been calculated to be 215,000 which one of the following changes in assumptions would decrease the npv

increase the discount rate an increase in the discount rate will decrease the present value of future cash inflows.

when determining NPV in an inflationary environment, adjustments should be made to

increase the estimated cash inflows and increase the discount rate ** in an inflationary environment, future cash flow should be increased to the extent of predicted inflation.

a multiperiod project has a positive net present value. which of the following statement is correct regarding required rate of return

less than the project internal rate of return **the required rate of return must be less than project IRR. the IRR is the rate earned by an investment that equates to a NPV of zero. p

which of the following inventory management techniques focuses on a set of procedures to determine inventory levels for demand-dependent inventory types such as work-in-process and raw materials

materials requirements planning

as used in capital budgeting analysis, the internal rate of return uses which of the following items in its computation

net incremental investment net annual cash flows

the discount rate is determined in advice for which of the following capital budgeting techniques

net present value

a company has unlimited capital funds to invest, the decision rule for the company to follow in order to maximize shareholder's results wealth is to invest in all projects having a

net present value greater than zero **if the NPV is positive, a project should be accepted, unless there is a better project. if a company has unlimited funds, all projects with a NPV greater than zero should be accepteded. **NPV positive or not is the first layer of decision

which of the following inputs would be most beneficial to consider when management is developing the capital budget

profit center equipment requests. **management would find the employee input associated with equipment requests from various profit centers most helpful.

whether to replace a deliver van. a new delivery van cost 40,000 can be purchased to replace the existing delivery van which cost the company 30,000 and has accumulated depreciation of 20,000. new offer is 12,000. which costs are most relevant

purchase price of new van, and disposal price of old van ** relevant if they change as a result of selecting a different alternatives. the decision to replace the old van will result in the company paying the purchase price of the new van and receiving disposal price of old van. purchase price of the new van nor the disposal price of the old van will be incurred.

the overall cost of capital is the

rate of return on assets that covers the cost associated with the funds employed

which one of the following would increase the working capital of a firm

refinancing of accounts payable with a two-year note payable **exchanging a/p for a two year notepayable would decrease cl

determining the appropriate level of working capital for a firm

requires offsetting the benefit of current assets and current liabilities against the probaility of technical insolvency

which of the following would increase quick ratio

selling obsolete inventory at loss **reduction of inventory values and recording the loss would have no impact on quick assets. addition of cash would increase w/o impact of current liabilities.

trade credit

subject to risk of buyer default

all of the following are the rates used in NPV analysis except for

the accounting rate of return ** cost of capital, hurdle rate, and discount rate, and required rate of return are in NPV

which of the following transactions would increase the current ratio and decrease net profit

vacant land is sold less than netbook value **increase cash and increase CA. sold at loss would decrease profit

in evaluating costs for decision-making, a company would always consider each of the following as relevant except

variable costs **variable costs change with the level of output but may not change purely in response to different selected alternatives. relevant costs are those costs that will change in response to the selection of different courses of action

what is the relationship between the allowance for doubtful accounts and working capital

when bad debts expense is recorded for the period, working capital decreases