Homework Answers
E is correct.
Typically, accounting break-even is lower than economic break even. At accounting break-even, there is no profit/loss. At economic break even, NPV is zero and IRR is the cost of capital.
Hence, All the statements are correct.
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Question 14 5 points Which of the following statements is FALSE? A Accounting break-even of quantity...
Question 15 10 points If forecasted sales exceed the accounting break-even level but are less than...
Question 15 10 points If forecasted sales exceed the accounting break-even level but are less than the economic break-even level, then the project has a: 1. positive NPV II. negative NPV III. positive net income IV. negative net income O AI and III B. II and IV c. I and IV D. II and III E. None of the above
7) Which of the following statements is FALSE? A) The IRR investment rule will identify the...
7) Which of the following statements is FALSE? A) The IRR investment rule will identify the correct decision in many, but not all, situations. B) By setting the NPV equal to zero and solving for r, we find the IRR. C) If you are unsure of your cost of capital estimate, it is important to determine how sensitive your analysis is to errors in this estimate. D) The simplest investment rule is the NPV investment rule. 8) Which of the...
Which of the following statements is FALSE? O A. The NPV will be positive if the...
Which of the following statements is FALSE? O A. The NPV will be positive if the IRR is less than the cost of capital O B. The IRR can be positive even if the NPV is negative OC. The NPV method is not affected by the multiple IRR problem. OD. If the multiple IRR problem does not exist, any independent project acceptable by NPV method will also be acceptable by the IRR method. O E. When IRR = k (the...
QUESTION 16 Which of the following statements are false? a. a liability is a debt for...
QUESTION 16 Which of the following statements are false? a. a liability is a debt for your business b. the accounting equation shows how much of your assets belong to the owner, and "how much belong to people outside the business c. if an item does not have future economic benefits, it shou not be kept as an asset d. none of the above
3 Problem 11-5 Sensitivity Analysis and Break-Even [LO1, 3] We are evaluating a project that costs...
3 Problem 11-5 Sensitivity Analysis and Break-Even [LO1, 3] We are evaluating a project that costs $691,200, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 85,000 units per year. Price per unit is $50, variable cost per unit is $35, and fixed costs are $740,000 per year. The tax rate is 24 percent, and we require a return of 10 percent on...
1. Which of the following statements is false? a. Explicit costs of using market-supplied resources entail...
1. Which of the following statements is false? a. Explicit costs of using market-supplied resources entail an opportunity cost equal to the dollar cost of obtaining the resources in the market. b. When economic profit is zero, the firm’s owners could NOT have done better putting their resources in some other industry of comparable risk. c. If economic profit is positive, accounting profit must also be positive. d. If economic profit is negative, accounting profit must also be negative. e....
1. Which of the following statements is true about independent projects? a.Independent projects are projects that, if ac...
1. Which of the following statements is true about independent projects? a.Independent projects are projects that, if accepted, have to accept one small project to assist other independent projects. b.Independent projects are projects that, if accepted or rejected, do not affect the cash flows of other projects. c.Independent projects are projects that, if accepted, have a negative effect on the company's profit. d.Independent projects are projects that, if accepted or rejected, affect the net profit of other projects. 2. An...
please answer all O Answer all questions .30 points Circle the letter for the correct answer...
please answer all
O Answer all questions .30 points Circle the letter for the correct answer If an asset is sold for less than is depreciation book value, it is taxed at the capital gain tax rate taxed at ordinary income tax rate. subject to tax savings due to capital loss d. not subject to any income tax consideration Changes in the firm's cash flows that are a dirst consequence of accepting a project are erosion cash flows e Net...
14 Which of the following statements is false? of Select one: a. Increased government borrowing raises...
14 Which of the following statements is false? of Select one: a. Increased government borrowing raises interest rates. b. Higher interest rates can depress investment. c. Lower investment means fewer capital goods in the future. d. Government deficits can have no effect on international trade. e. Government deficits can lower the level of output in the economy. Question 14 Which of the following statements is false? Not yet answered Points out of 1.00 P Flag question Select one: a. Increased...
15) Which of the following ratios is most useful for examining 'financial leverage? a) Return on...
15) Which of the following ratios is most useful for examining 'financial leverage? a) Return on equity (ROE) b) Return on assets (ROA) c) Asset turnover ratio d) Debt ratio e) Current ratio 14) A company is considering demolishing existing buildings (on a site which is already owned by the company) and replacing them with a brand new manufacturing plant. Which ONE of the following should NOT be treated as an incremental cash flow when deciding whether to invest in...
7) Which of the following statements is FALSE? A) The IRR investment rule will identify the correct decision in many, but not all, situations. B) By setting the NPV equal to zero and solving for r, we find the IRR. C) If you are unsure of your cost of capital estimate, it is important to determine how sensitive your analysis is to errors in this estimate. D) The simplest investment rule is the NPV investment rule. 8) Which of the...
Which of the following statements is FALSE? O A. The NPV will be positive if the IRR is less than the cost of capital O B. The IRR can be positive even if the NPV is negative OC. The NPV method is not affected by the multiple IRR problem. OD. If the multiple IRR problem does not exist, any independent project acceptable by NPV method will also be acceptable by the IRR method. O E. When IRR = k (the...
QUESTION 16 Which of the following statements are false? a. a liability is a debt for your business b. the accounting equation shows how much of your assets belong to the owner, and "how much belong to people outside the business c. if an item does not have future economic benefits, it shou not be kept as an asset d. none of the above
3 Problem 11-5 Sensitivity Analysis and Break-Even [LO1, 3] We are evaluating a project that costs $691,200, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 85,000 units per year. Price per unit is $50, variable cost per unit is $35, and fixed costs are $740,000 per year. The tax rate is 24 percent, and we require a return of 10 percent on...
please answer all
O Answer all questions .30 points Circle the letter for the correct answer If an asset is sold for less than is depreciation book value, it is taxed at the capital gain tax rate taxed at ordinary income tax rate. subject to tax savings due to capital loss d. not subject to any income tax consideration Changes in the firm's cash flows that are a dirst consequence of accepting a project are erosion cash flows e Net...
14 Which of the following statements is false? of Select one: a. Increased government borrowing raises interest rates. b. Higher interest rates can depress investment. c. Lower investment means fewer capital goods in the future. d. Government deficits can have no effect on international trade. e. Government deficits can lower the level of output in the economy. Question 14 Which of the following statements is false? Not yet answered Points out of 1.00 P Flag question Select one: a. Increased...
15) Which of the following ratios is most useful for examining 'financial leverage? a) Return on equity (ROE) b) Return on assets (ROA) c) Asset turnover ratio d) Debt ratio e) Current ratio 14) A company is considering demolishing existing buildings (on a site which is already owned by the company) and replacing them with a brand new manufacturing plant. Which ONE of the following should NOT be treated as an incremental cash flow when deciding whether to invest in...
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