Professional Documents
Culture Documents
Corporate Finance 11th Edition Ross Test Bank 1
Corporate Finance 11th Edition Ross Test Bank 1
Chapter 06
1. The changes in a firm's future cash flows that are a direct consequence of accepting a project are
called _____ cash flows.
A. incremental
B. stand-alone
C. opportunity
D. net present value
E. erosion
2. The annual annuity stream of payments with the same present value as a project's costs is called
the project's _____ cost.
A. incremental
B. sunk
C. opportunity
D. erosion
E. equivalent annual
3. A cost that has already been paid, or the liability to pay has already been incurred, is a(n):
5. A decrease in a firm’s current cash flows resulting from the implementation of a new project is
referred to as:
6. The depreciation method currently allowed under U.S. tax law governing the accelerated write-off
of property under various lifetime classifications is called _____ depreciation.
A. FIFO
B. MACRS
C. straight-line
D. sum-of-years digits
E. curvilinear
7. The cash flow tax savings generated as a result of a firm's tax-deductible depreciation expense is
called the:
A. net operating cash flow generated by the project, less any sunk costs and erosion costs.
B. sum of the incremental operating cash flow and aftertax salvage value of the project.
C. net income generated by the project, plus the annual depreciation expense.
D. sum of the incremental operating cash flow, capital spending, and net working capital cash
flows incurred by the project.
E. sum of the sunk costs, opportunity costs, and erosion costs of the project.
9. Interest rates or rates of return on investments that have been adjusted for the effects of inflation
are called _____ rates.
A. real
B. nominal
C. effective
D. stripped
E. coupon
10. The increase you realize in buying power as a result of owning an investment is referred to as the
_____ rate of return.
A. inflated
B. realized
C. nominal
D. real
E. risk-free
11. The pro forma income statement for a cost reduction project:
A. isolate the total sunk costs so they can be evaluated to determine if the project will add value
to the firm.
B. eliminate any cost which has previously been incurred so that it can be omitted from the
analysis of the project.
C. make each project appear as profitable as possible for the firm.
D. include both the proposed and the current operations of a firm in the analysis of the project.
E. identify any and all changes in the cash flows of the firm for the past year so they can be
included in the analysis.
14. You spent $500 last week fixing the transmission in your car. Now, the brakes are acting up and
you are trying to decide whether to fix them or trade the car in for a newer model. In analyzing the
brake situation, the $500 you spent fixing the transmission is a(n) _____ cost.
A. opportunity
B. fixed
C. incremental
D. sunk
E. relevant
17. Which one of the following should be excluded from the analysis of a project?
A. erosion costs
B. incremental fixed costs
C. incremental variable costs
D. sunk costs
E. opportunity costs
18.
All of the following are anticipated effects of a proposed project. Which of these should be
considered when computing the cash flow for the final year of a project?
A. can affect the cash flows of a project every year of the project's life.
B. only affect the initial cash flows of a project.
C. are included in project analysis only if they represent cash outflows.
D. are generally excluded from project analysis due to their irrelevance to the total project.
E. affect the initial and the final cash flows of a project but not the cash flows of the middle years.
Another document from Scribd.com that is
random and unrelated content:
CHAPTER VI
S W H I
P C
FOOTNOTES:
[61] Jordan, The Voice of the Scholar, pp. 173-4.
[62] Paulsen, German Universities, Character and Historical
Development, pp. 21-22.
[63] Jordan, The Voice of the Scholar, pp. 115-6.
[64] Veblen, The Theory of the Leisure Class, p. 375.
[65] Veblen, The Theory of the Leisure Class, pp. 375-6.
[66] Outlook, Vol. 88, pp. 481, 515.
CHAPTER VII
T E I C U M
FOOTNOTES:
[67] Howard, A History of Matrimonial Institutions, I, pp. 60-61.
[68] Ibid, I, p. 115.
[69] Ward, Pure Sociology, p. 358.
[70] Morgan, Ancient Society, p. 501.
[71] Hobhouse, Morals in Evolution, p. 140.
[72] Grosse, Familie und Wirthschaft, p.
[73] Hobhouse, Morals in Evolution, I, p. 43.
[74] Grosse, Familie und Wirthschaft, pp. 73-4.
[75] Grosse, Ibid, pp. 104-5.
[76] Starke, The Primitive Family, pp. 99, 100.
[77] Hobhouse, Morals and Evolution, I, p. 176.
[78] Earle, Home Life in Colonial Days, pp. 166-7.
[79] Letourneau, The Evolution of Marriage, p. 352.
[80] E. Vandervelde, L’Exode Rural.
[81] Bailey, Modern Social Conditions, p. 139.
[82] Mayo-Smith, Statistics and Sociology, p. 100.
[83] Letourneau, The Evolution of Marriage, pp. 351-2.
[84] See page 51.
[85] Howard, A History of Matrimonial Institutions, III, 227-8.
CHAPTER VIII
E F B -R
FOOTNOTES:
[86] McLennan, Studies in Ancient History, pp. 81-2, 2nd Series.
[87] Westermarck.
[88] Phelps, A Statistical Study of Infant Mortality, p. 268. Quarterly
Publication of The American Statistical Association.
[89] Commander, The American Idea, p. 18.
[90] Webb, Physical Degeneracy or Race Suicide. Popular Science
Monthly, Dec. 1906, pp. 515-6.
[91] Annual Report for 1906, p. 10. American Journal of Sociology,
March, 1909. Doctor Morrow says, “A large proportion of sterile marriages,
contrary to the popular view, is from incapacity and not of choice.” p. 626.
[92] Thorndyke, Decrease in the Size of American Families. Popular
Science Monthly, May, 1903, p. 69.
[93] Department of Commerce and Labor, Emigration to the U. S. 1904,
pp. 105, 112.
[94] Ross, Western Civilisation and the Birth-Rate. Am. Jour. of Soc. XII,
610, March 1907.
CHAPTER IX
E C D -R
So long has society been accustomed to accepting as final the laws and
customs arising out of earlier social conditions, that changes brought
about by new conditions, and contrary to the accepted scheme of things
arouse a widespread concern. There is no better illustration of the
conflict between the new and the old than the present tendency to
divorce, and the steady pressure of our social institutions to combat this
tendency.
It did not take primitive man long to see that organization was
essential to preservation. Only the best organized tribes could survive in
a struggle; and the closer the organization, the greater the advantage
when contending with outside or hostile forces. The basis of tribal
organization was the family, and the tribes with the best organized
families in a growing society proved the most effective in the tribal life.
When the family became a recognized unit of stability—either for
methods of warfare or economic reasons—forces arose tending to
establish sentiments opposed to divorce. It was of primary importance
that these sentiments should be accepted as a code of morality in a
loosely organized society. It is when the larger organization, such as the
state, is not strong enough to maintain its own stability, that it is of the
utmost importance that the units composing it should be compact and
self reliant. Only in a highly organized, socialized society, can the family
be viewed as a compact with the welfare of its individual members as its
sole motive for existence.
In primitive times the unity of the family was of the utmost
importance to the men of the tribe as well as to the women. The
permanency of the marriage relation was essential to the preservation of
society, for the state could not assume the function of protection in
contradistinction to the protection afforded by the male head of the
family. It is only in peaceable communities where the occupations of the
people are principally industrial that a social consciousness arises,
making possible a non-militant social compact looking toward the
individual’s welfare as part of the community welfare.