Principles of Finance

When making investment decisions, we focus on after-tax cash flows because: (Points : 1)

  taxes must be paid.
  those are the cash flows available to shareholders.
  taxes can have a significant effect on profits.
  tax rates differ across companies.

Question 2.2. Which of the following is true when a company has very little debt? (Points : 1)

  The expected costs of bankruptcy will be moderate.
  The expected costs of bankruptcy will be about zero.
  The risk of bankruptcy is still significant.
  Managers will work very hard to avoid bankruptcy.

Question 3.3. Rather than just add up all the costs associated with a proposed investment, the with-and-without principle recognizes that some cash flows might not be incremental. Examples of nonincremental project costs are: (Points : 1)

  sunk costs, additional revenues, and COGS of new products.
  sunk costs, allocation of overhead, and cannibalism of sales.
  sunk costs, allocation of overhead, and depreciation of new equipment.
  allocation of overhead, additional revenues, and costs.

Question 4.4. You receive an annual raise of $4,000. If you tax rate is 22%, how much will this increase your after-tax earnings? (Points : 1)


Question 5.5. In perfect capital markets, the capital structure decision is: (Points : 1)

  important because it affects the cash flows to shareholders.
  important because debt and equity are taxed differently.
  irrelevant because the decision has no effect on cash flows.
  important sometimes.

Question 6.6. Sunk costs are best described as: (Points : 1)

  money that has been lost.
  an expenditure that did not produce a profitable product.
  an expenditure on a product that was later discontinued.
  expenditures on a proposed project that cannot be recovered whether the project is implemented or not.

Question 7.7. The appropriate cash flows for evaluating a corporate investment decision are: (Points : 1)

  incremental additional cash flows.
  marginal after-tax cash flows.
  incremental after-tax cash flows.
  investment after-tax cash flows.

Question 8.8. Debt financing is called leverage because, like a lever in mechanics, it: (Points : 1)

  makes the company stronger.
  magnifies the influence a company has.
  has a magnifying effect on financial performance.
  can lift a company out of mediocre performance.

Question 9.9. Chapter 7 introduced three methods for evaluating a corporate investment decision. Which of the following is not one of those methods? (Points : 1)

  payback period
  net present value (NPV)
  return on assets (ROA)
  internal rate of return (IRR)

Question 10.10. The appropriate cash flows for evaluating a corporate investment decision are: (Points : 1)

  incremental additional cash flows.
  marginal after-tax cash flows.
  incremental after-tax cash flows.
  investment after-tax cash flows.

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
error: Content is protected !!