On the Statement of Cash Flows, which of the following are considered financing activities?

On the Statement of Cash Flows, which of the following are considered financing activities? I. increase in long-term debt II. decrease in accounts payable III. interest paid IV. dividends paid    A.  I and IV only B.  III and IV only C.  II and III only D.  I, III, and IV only E.  I, II, III, and IV

13.	On the Statement of Cash Flows, which of the following are considered operating activities? I. costs of goods sold II. decrease in accounts payable III. interest paid IV. dividends paid    A.  I and III only B.  III and IV only C.  I, II, and III only D.  I, III, and IV only E.  I, II, III, and IV

14.	According to the Statement of Cash Flows, a decrease in accounts receivable will _____ the cash flow from _____ activities.    A.  decrease; operating B.  decrease; financing C.  increase; operating D.  increase; financing E.  increase; investment

15.	According to the Statement of Cash Flows, an increase in interest expense will _____ the cash flow from _____ activities.    A.  decrease; operating B.  decrease; financing C.  increase; operating D.  increase; financing E.  increase; investment

You are considering changing jobs. Your goal is to work for three years and then return to school full-time in pursuit of an advanced degree

You are considering changing jobs. Your goal is to work for three years and then return to school full-time in pursuit of an advanced degree. A potential employer just offered you an annual salary of $41,000, $43,000, and $46,000 a year for the next three years, respectively. All salary payments are made as lump sum payments at the end of each year. The offer also includes a starting bonus of $3,000 payable immediately. What is this offer worth to you today at a discount rate of 6.75 percent?    A.  $111,406 B.  $114,545 C.  $116,956 D.  $120,212 E.  $133,697

72.

You are considering a project which will provide annual cash inflows of $4,500, $5,700, and $8,000 at the end of each year for the next three years, respectively. What is the present value of these cash flows, given a 9 percent discount rate?    A.  $14,877 B.  $15,103 C.  $15,429 D.  $16,388 E.  $16,847

73.	You just signed a consulting contract that will pay you $38,000, $52,000, and $85,000 annually at the end of the next three years, respectively. What is the present value of these cash flows given a 10.5 percent discount rate?    A.  $139,975 B.  $148,307 C.  $154,880 D.  $157,131 E.  $162,910

You are trying to compare the present values of two separate streams of cash flows which have equivalent risks

The Fisher Effect primarily emphasizes the effects of _____ on an investor's rate of return.    A.  default B.  market C.  interest rate D.  inflation E.  maturity Refer to section 7.6

77.

You are trying to compare the present values of two separate streams of cash flows which have equivalent risks. One stream is expressed in nominal values and the other stream is expressed in real values. You decide to discount the nominal cash flows using a nominal annual rate of 8 percent. What rate should you use to discount the real cash flows?    A.  8 percent B.  EAR of 8 percent compounded monthly C.  comparable risk-free rate D.  comparable real rate E.  You cannot compare the present values of these two streams of cash flows. Refer to section 7.6

78.

Which of the following statements is correct concerning the term structure of interest rates? I. Expectations of lower inflation rates in the future tend to lower the slope of the term structure of interest rates. II. The term structure of interest rates includes both an inflation premium and an interest rate risk premium. III. The real rate of return has minimal, if any, affect on the slope of the term structure of interest rates. IV. The term structure of interest rates and the time to maturity are always directly related.    A.  I and II only B.  II and IV only C.  I, II, and III only D.  II, III, and IV only E.  I, II, and IV only Refer to section 7.7

Blue Water Systems is analyzing a project with the following cash flows. Should this project be accepted

You are considering two independent projects with the following cash flows. The required return for both projects is 16 percent. Given this information, which one of the following statements is correct?        A.  You should accept Project A and reject Project B based on their respective NPVs. B.  You should accept Project B and reject Project A based on their respective NPVs. C.  You should accept Project A and reject Project B based on their respective IRRs. D.  You should accept Project B and reject Project A based on their respective IRRs. E.  You should accept both projects based on both the NPV and IRR decision rules.

65.

You are considering an investment with the following cash flows. If the required rate of return for this investment is 15.5 percent, should you accept the investment based solely on the internal rate of return rule? Why or why not?        A.  Yes; The IRR exceeds the required return. B.  Yes; The IRR is less than the required return. C.  No; The IRR is less than the required return. D.  No; The IRR exceeds the required return. E.  You cannot apply the IRR rule in this case. Since the cash flow direction changes twice, there are two IRRs. Thus, the IRR rule cannot be used to determine acceptance or rejection.

66.

Blue Water Systems is analyzing a project with the following cash flows. Should this project be accepted based on the discounting approach to the modified internal rate of return if the discount rate is 14 percent? Why or why not?        A.  Yes; The MIRR is 13.48 percent. B.  Yes; The MIRR is 17.85 percent. C.  Yes; The MIRR is 21.23 percent. D.  No; The MIRR is 5.73 percent. E.  No; The MIRR is 17.85 percent.

A project with financing type cash flows is typified by a project that has which one of the following characteristics?

A project with financing type cash flows is typified by a project that has which one of the following characteristics?    A.  conventional cash flows B.  cash flows that extend beyond the acceptable payback period C.  a year or more in the middle of a project where the cash flows are equal to zero D.  a cash inflow at time zero E.  cash inflows which are equal in amount Refer to section 9.5

38.

Which of the following statements generally apply to the cash flows of a financing type project? I. nonconventional cash flows II. cash outflows exceed cash inflows prior to any time value adjustments III. cash for services rendered is received prior to the cash that is spent providing the services IV. the total of all cash flows must equal zero on an unadjusted basis    A.  I only B.  I and III only C.  II and IV only D.  I, II, and III only E.  I, II, III, and IV Refer to section 9.5

39.

Which one of the following statements is correct in relation to independent projects?    A.  The internal rate of return cannot be used to determine the acceptability of a project that has financing type cash flows. B.  A project with investing type cash flows is acceptable if its internal rate of return exceeds the required return. C.  A project with financing type cash flows is acceptable if its internal rate of return exceeds the required return. D.  The net present value profile is upsloping for projects with both investing and financing type cash flows. E.  Projects with financing type cash flows are acceptable only when the internal rate of return is negative. Refer to section 9.5

40.	The profitability index is most closely related to which one of the following?    A.  payback B.  discounted payback C.  average accounting return D.  net present value E.  modified internal rate of return Refer to section 9.6