Question

Please solve, show work, and give detail explanation

1. The percentage of the next dollar you earn that must be paid in taxes is referred to as the average tax rate. a. True b. False 2. The effective annual rate (EAR) equals the annual percentage rate (APR) when interest is compounded annually. a. True b. False 3. One of the disadvantages of a corporation as a business entity is double taxation. a. True b. False 4. A highly liquid asset can be converted to cash quickly without a significant loss in value. a. True b. False 5. A goal of corporations is to create value over time for the owners of the firm. a. True b. False 6 An annuity due will always have a higher present value and higher future value than an ordinary annuity. a. True b. False 7. A perpetuity is a finite series of equal cash flows. a. True b. False 8. To find the per-period interest rate, you divide the effective annual rate (EAR) by the number of periods per year. a. True b. False 9. According to the net present value rule, an investment should be accepted if the NPV is positive and rejected if the NPV is negative. a. True b. False 10. The crossover rate is the discount rate that makes the NPV of the project = $0. a. True b. False

Answer 1

1.
False, marginal tax rate

2.
True

3.
True

4.
True

5.
False, Shareholders of the firm

6.
True

7.
False, infinite

8.
False, divide the APR

9.
True

10.
False, makes NPV equal for both projects