Бүлгийн сорил тест - Капиталын төсөвлөлт - Attempt review

10/5/23, 12:34 PM Бүлгийн сорил тест - Капиталын төсөвлөлт: Attempt review
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Dashboard - My courses - Өдөр / FIN444 - ДУНД ТҮВШНИЙ КОРПОРАЦИЙН САНХҮҮ - Капиталын төсөвлөлт - Бүлгийн сорил тест - Капиталын төсөвлөлт
https://online.ufe.edu.mn/mod/quiz/review.php?attempt=1450283&cmid=334251 1/16
Started on Monday, 25 September 2023, 11:24 AM


State Finished
Completed on Monday, 25 September 2023, 11:47 AM
Time taken 22 mins 11 secs
Marks 5.00/30.00
Grade 16.67 out of 100.00
Question 1
Incorrect Mark 0.00 out of 1.00
Use the information for the question(s) below.Ford Motor Company is considering launching a new line of Plug-
in Electric SUVs. The heavy advertising expenses associated with the new SUV launch would generate operating
losses of $35 million next year. Without the new SUV, Ford expects to earn pre-tax income of $80 million from
operations next year. Ford pays a 21% tax rate on its pre-tax income.The amount that Ford Motor Company will
owe in taxes next year with the launch of the new SUV is closest to:
Select one:
A. $56.0 million.
B. $31.5 million. 
C. $24.0 million.
D. $9.45 million.
= ($80 million - $35 million) × .21 = $9.45 million

The correct answer is: $9.45 million.
Question 2
Use the information for the question(s) below.The Sisyphean Corporation is considering investing in a new cane
manufacturing machine that has an estimated life of three years. The cost of the machine is $30,000 and the
machine will be depreciated straight line over its three-year life to a residual value of $0.The cane
manufacturing machine will result in sales of 2000 canes in year 1. Sales are estimated to grow by 10% per year
each year through year three. The price per cane that Sisyphean will charge its customers is $18 each and is to
remain constant. The canes have a manufacturing cost of $9 each.Installation of the machine and the resulting
increase in manufacturing capacity will require an increase in various net working capital accounts. It is
estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash, 4% of its annual sales in
accounts receivable, 9% of its annual sales in inventory, and 6% of its annual sales in accounts payable. The firm
is in the 21% tax bracket, and has a cost of capital of 10%.The incremental EBIT in the first year for the Sisyphean
Corporation's project is closest to:
Select one:
A. $11,700. 
B. $18,000.
C. $8000.
D. $5200.
Incremental Earnings Forecast ($)

Year 1 2 3
Units 2000 2200 2420
Sales (units × $18) 36,000 39,600 43,560
Cost of Goods Sold (units ×
18,000 19,800 21,780
 $9)
Gross Profit 18,000 19,800 21,780
Depreciation ($30,000/3) 10,000 10,000 10,000
EBIT 8000 9800 11,780
Income Tax at 21% 1680 2058 2474
Unlevered Net Income 6320 7742 9306
The correct answer is: $8000.
Question 3
Not answered Marked out of 1.00
What is an opportunity cost? Should it be included in the incremental cash flows for a project? Why or why
not?
Question 4
Correct Mark 1.00 out of 1.00
Use the information for the question(s) below.Ford Motor Company is considering launching a new line of Plug-
in Electric SUVs. The heavy advertising expenses associated with the new SUV launch would generate operating
losses of $35 million next year. Without the new SUV, Ford expects to earn pre-tax income of $80 million from
operations next year. Ford pays a 21% tax rate on its pre-tax income.The amount that Ford Motor Company will
owe in taxes next year without the launch of the new SUV is closest to:
Select one:
A. $9.45 million.
= $80 million × .21 =

B. $16.8 million. 
$16.8 million
C. $31.5 million.
D. $56.0 million.
= $80 million × .21 = $16.8 million

= $80 million × .21 = $16.8 million
The correct answer is: $16.8 million.
Question 5


Money that has been or will be paid regardless of the decision whether or not to proceed with the project is:
Select one:
A. considered as part of the initial investment in the project.
B. a sunk cost. 
C. cannibalization.
D. an opportunity cost.
The correct answer is: a sunk cost.
Question 6
Use the information for the question(s) below.The Sisyphean Corporation is considering investing in a new
cane manufacturing machine that has an estimated life of three years. The cost of the machine is $30,000
and the machine will be depreciated straight line over its three-year life to a residual value of $0.The cane
manufacturing machine will result in sales of 2000 canes in year 1. Sales are estimated to grow by 10% per
year each year through year three. The price per cane that Sisyphean will charge its customers is $18 each
and is to remain constant. The canes have a manufacturing cost of $9 each.Installation of the machine and
the resulting increase in manufacturing capacity will require an increase in various net working capital
accounts. It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash, 4% of
its annual sales in accounts receivable, 9% of its annual sales in inventory, and 6% of its annual sales in
accounts payable. The firm is in the 21% tax bracket, and has a cost of capital of 10%.Construct a simple
income statement showing the incremental EBIT and the incremental unlevered net income for all three
years of the Sisyphean Corporation's project.
Question 7
Which of the following statements is FALSE?

Select one:
A. Sometimes the firm explicitly forecasts free cash flow over a shorter horizon than the full horizon of the project or investment.
B. Firms often report different depreciation expenses for accounting and for tax purposes.

C. Earnings include the cost of capital investments, but do not include non-cash charges, such as depreciation.
D. Depreciation is a method used for accounting and tax purposes to allocate the original purchase cost of the asset over its life. 
Earnings include non-cash charges, such as depreciation, but do not include the cost of capital investment.
The correct answer is: Earnings include the cost of capital investments, but do not include non-cash charges, such as depreciation.
Question 8

Select one:
A. Depreciation is not a cash expense paid by the firm.
B. Net Working Capital = Cash + Inventory + Payables - Receivables.
C. Prior to 2018, companies could "carry back" losses for two years and "carry forward" losses for 20 years. 
D. Earnings do not represent real profits.
Net Working Capital = Cash + Inventory + Receivables - Payables.

The correct answer is: Net Working Capital = Cash + Inventory + Payables - Receivables.
Question 9
Use the information for the question(s) below.The Sisyphean Corporation is considering investing in a new cane
manufacturing machine that has an estimated life of three years. The cost of the machine is $30,000 and the
machine will be depreciated straight line over its three-year life to a residual value of $0.The cane
manufacturing machine will result in sales of 2000 canes in year 1. Sales are estimated to grow by 10% per year
each year through year three. The price per cane that Sisyphean will charge its customers is $18 each and is to
remain constant. The canes have a manufacturing cost of $9 each.Installation of the machine and the resulting
increase in manufacturing capacity will require an increase in various net working capital accounts. It is
estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash, 4% of its annual sales in
accounts receivable, 9% of its annual sales in inventory, and 5% of its annual sales in accounts payable. The firm
is in the 21% tax bracket, and has a cost of capital of 10%.The change in Net working capital from year one to
year two is closest to:
Select one:
A. An increase of $396.
B. A decrease of $396. 
C. An increase of $360.
D. A decrease of $360.
Networking Capital Forecast ($)

Year 1 2 3
Units 2000 2200 2420
Sales (units × $18) 36,000 39,600 43,560
Cash (2% of sales) 720 792 871.2
Accounts Receivable (4% of
1440 1584 1742.4
sales)
Inventory (9% of sales) 3240 3564 3920.4
Accounts Payable (5% of sales) 1800 1980 2178
NWC (Cash + Inventory+ AR -
3600 3960 4356
AP)
Change = $3960 - $3600 = $360
Change = $3960 - $3600 = $360
 The correct answer is: An increase of $360.
Question 10
Use the information for the question(s) below.Epiphany Industries is considering a new capital budgeting
project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project.
Based on extensive research, it has prepared the following incremental cash flow projections:
Year 0 1 2 3
Sales (Revenues in
100,000100,000100,000
$)
- Cost of Goods
50,000 50,000 50,000
Sold (50% of Sales)
- Depreciation 30,000 30,000 30,000
= EBIT 20,000 20,000 20,000
- Taxes (21%) 4200 4200 4200
= Unlevered Net
15,800 15,800 15,800
Income
+ Depreciation 30,000 30,000 30,000
+ Changes to
-5000 -5000 10,000
Working Capital
- Capital
-90,000
Expenditures
The free cash flow for the last year of Epiphany's project is closest to:
Select one:
A. $43,000.
B. $38,000.
C. $35,000. 
D. $55,800.
Year 0 1 2 3
Sales (Revenues in $) 100,000 100,000 100,000
- Cost of Goods Sold (50% of
50,000 50,000 50,000
Sales)
- Depreciation 30,000 30,000 30,000
= EBIT 20,000 20,000 20,000
- Taxes (21%) 4200 4200 4200
= Unlevered Net Income 15,800 15,800 15,800
+ Depreciation 30,000 30,000 30,000
+ Changes to Working Capital -5000 -5000 10,000
- Capital Expenditures -90,000
= Free Cash Flow -90,000 40,800 40,800 55,800

PV of FCF (FCF/(1 + I)n -90,000 36,428 32,526 39,717
Discount Rate 0.12
NPV = 18,671
IRR = 23.09%
The correct answer is: $55,800.
Question 11
Use the information for the question(s) below Shepard Industries is evaluating a proposal to expand its current
Use the information for the question(s) below.Shepard Industries is evaluating a proposal to expand its current
 distribution facilities. Management has projected the project will produce the following cash flows for the first
two years (in millions).
Year 1 2
Revenues 1200 1400
Operating
450 525
Expense
Depreciation 240 280
Increase in
60 70
working capital
Capital
300 350
expenditures
Marginal
corporate tax 21% 21%
rate
The incremental unlevered net income of the Shepard Industries project in year one is closest to:
Select one:
A. $510 million. 
B. $470 million.
C. $600 million.
D. $403 million.
Year 1 Year 2
Revenues 1200 1400
- Expenses 450 525
- Depreciation 240 280
= EBIT 510 595
- Taxes (21%) 107.1 124.95
Incremental Net Income 402.9 470.05
The correct answer is: $403 million.
Question 12
You are considering investing $600,000 in a new automated inventory system that will provide after-tax cost
savings of $50,000 next year. These cost savings are expected to grow at the same rate as sales. If sales are
expected to grow at 5% per year and your cost of capital is 10%, then what is the NPV of the automated
inventory system?
Select one:
A. -$100,000
B. $400,000
C. $1,000,000
D. $500,000 
NPV = - $600,000 = $400,000
The correct answer is: $400,000
Question 13

Use the following information to answer the question(s) below.Two years ago, Krusty Krab Restaurant
purchased a grill for $50,000. The owner, Eugene Krabs, has learned that a new grill is available that will cook
Krabby Patties twice as fast as the existing grill. This new grill can be purchased for $80,000 and would be
depreciated straight line over 8 years, after which it would have no salvage value. Eugene Krab expects that the
new grill will produce EBITDA of $50,000 per year for the next eight years while the existing grill produces EBITDA
of only $35,000 per year. The current grill is being depreciated straight line over its useful life of 10 years after
which it will have no salvage value. All other operating expenses are identical for both grills. The existing grill can
be sold to another restaurant now for $30,000. Krusty Krab's tax rate is 21%.The incremental cash flow that Krusty
Krab will incur today (Year 0) if they elect to upgrade to the new grill is closest to:
Select one:
A. -$47,900.
B. -$80,000.
C. -$50,000. 
D. +$30,000.
CF0 = -$80,000 + $30,000 + .21($40,000 - $30,000) [tax write-off old grill sold at loss] = -$47,900
The correct answer is: -$47,900.
Question 14
Use the following information to answer the question(s) below.Galt Motors currently produces 500,000 electric
motors a year and expects output levels to remain steady in the future. It buys armatures from an outside
supplier at a price of $2.50 each. The plant manager believes that it would be cheaper to make these
armatures rather than buy them. Direct in-house production costs are estimated to be only $1.80 per armature.
The necessary machinery would cost $700,000 and would be obsolete in 10 years. This investment would be
depreciated to zero for tax purposes using a 10-year straight line depreciation. The plant manager estimates
that the operation would require additional working capital of $40,000 but argues that this sum can be ignored
since it is recoverable at the end of the ten years. The expected proceeds from scrapping the machinery after
10 years are estimated to be $10,000. Galt Motors pays tax at a rate of 21% and has an opportunity cost of
capital of 14%.The incremental cash flow that Galt Motors will incur in year 4 if they elect to manufacture
armatures in-house is closest to:
Select one:
A. $365,000.
B. $25,000.
C. $1,250,000. 
D. $350,000.
Incremental cash flow = 500,000 units × ($2.50 - $1.80) + .21 × $700,000/10 = $364,700
Question 15
ill ill d EBITDA f $50 000
https://online.ufe.edu.mn/mod/quiz/review.php?attempt=1450283&cmid=334251
f th t i ht hil th i ti ill d EBITDA 8/16

be sold to another restaurant now for $30,000. Krusty Krab's tax rate is 21%.If Krusty Krab's opportunity cost of
capital is 12%, then the IRR for upgrading to the new grill is closest to:
Select one:
A. 3.25%.
B. 16.00%.
C. 21.00%.
D. 18.25%. 
CF0 = -$80,000 + $30,000 + .21($40,000 - $30,000) [tax write-off old grill sold at loss] = -$47,900Incremental EBITDA = $50,000 - $35,000 =
$15,000Incremental Depreciation = $80,000/8 - $50,000/10 = $5000Incremental cash flow (years 1 - 8) = ($15,000 - $5000) × (1 - .21) + $5000 =
$12,900CF0 = -$47,900, CFj = 12,900. nj = 8, compute IRR = 21.11%
The correct answer is: 21.00%.
Question 16
be sold to another restaurant now for $30,000. Krusty Krab's tax rate is 21%.The incremental cash flow that Krusty
Krab will incur in year 1 if they elect to upgrade to the new grill is closest to:
Select one:
A. $11,500.
B. $7800.
C. $10,800. 
D. $6500.
Incremental EBITDA = $50,000 - $35,000 = $15,000Incremental Depreciation = $80,000/8 - $50,000/10 = $5000Incremental cash flow = ($15,000 - $5000)
× (1 - .21) + $5000 = $12,900
Question 17
be sold to another restaurant now for $30,000. Krusty Krab's tax rate is 21%.If Krusty Krab's opportunity cost of
capital is 12%, what decision should Krusty Krab take regarding the new grill?
capital is 12%, what decision should Krusty Krab take regarding the new grill?
 Select one:
A. Do not install the new grill since IRR is less than 12%
B. Install the new grill since IRR is approximately = 15% 
C. Install the new grill since NPV is approximately = + $16,183
D. Do not install the new grill since NPV is approximately = - $16,183
CF0 = -$80,000 + $30,000 + .21($40,000 - $30,000) [tax write-off old grill sold at loss] = -$47,900Incremental EBITDA = $50,000 - $35,000 =
$15,000Incremental Depreciation = $80,000/8 - $50,000/10 = $5000Incremental cash flow (years 1 - 8) = ($15,000 - $5000) × (1 - .21) + $5000 =
$12,900CF0 = -$47,900, CFj = 12,900. nj = 8, I = 12, compute NPV = $16,182.55;compute IRR = 21.11%
The correct answer is: Install the new grill since NPV is approximately = + $16,183
Question 18
Use the following information to answer the question(s) below.Galt Motors currently produces 500,000 electric
motors a year and expects output levels to remain steady in the future. It buys armatures from an outside
supplier at a price of $2.50 each. The plant manager believes that it would be cheaper to make these
armatures rather than buy them. Direct in-house production costs are estimated to be only $1.80 per armature.
The necessary machinery would cost $700,000 and would be obsolete in 10 years. This investment would be
depreciated to zero for tax purposes using a 10-year straight line depreciation. The plant manager estimates
that the operation would require additional working capital of $40,000 but argues that this sum can be ignored
since it is recoverable at the end of the ten years. The expected proceeds from scrapping the machinery after
10 years are estimated to be $10,000. Galt Motors pays tax at a rate of 21% and has an opportunity cost of
capital of 14%.The incremental cash flow that Galt Motors will incur in year 10 if they elect to manufacture
armatures in-house is closest to:
Select one:
A. $335,000.
B. $40,000.
C. $375,000. 
D. $405,000.
Incremental cash flow = 500,000 units × ($2.50 - $1.80) + .21 × $700,000/10 + $40,000 = $404,700
Question 19
Use the following information to answer the question(s) below.Taggart Transcontinental is considering adding a
trucking division to expand the coverage of its existing rail lines. The trucking division will cost $1,000,000 and is
expected to generate free cash flows of $100,000 for each of the next five years. Taggart Transcontinental
forecasts that future free cash flows after year 5 will grow at 2% per year, forever. Taggart Transcontinental's
cost of capital is 10%.The NPV for the trucking division is closest to:
Select one:
A. $170,750.
B. $200,000.
C. $312,500.
D. $212,550.
E. $250,000. 
. $ 5 , .

Continuation value (year 5) = PMT(1 + g)/(i - g) = $100,000(1.02)/(.10 - .02) = $1,275,000PMT = $100,000, FV = $1,275,000, N = 5, I = 10, Compute PV =
$1,170,753.36 - $1,000,000 = $170,753.36
Question 20
Use the following information to answer the question(s) below.Really Big Conglomerate (RBC) is considering
acquiring POP, Inc., a smaller unsuccessful Internet firm. POP has outstanding tax loss carryforwards of $320
million from losses over the past six years. RBC has pre-tax income of $100 million per year, a cost of capital of
10%, and pays 21% in taxes. The Tax Cuts and Jobs Act of 2017 will limit RBC's ability to write off the carryforwards
to 80% of RBC's annual pre-tax income.If RBC acquires POP, in what year will RBC completely use up the tax loss
carryforward?
Select one:
A. 2 years
The tax shield will last for $320 million/($100

B. 4 years 
million × 0.80) = 4.0 years.
C. 3 years
D. 5 years
The tax shield will last for $320 million/($100 million × 0.80) = 4.0 years.
The tax shield will last for $320 million/($100 million × 0.80) = 4.0 years.
The correct answer is: 4 years
Question 21
Use the following information to answer the question(s) below.(Include the MACRS Table from the
Appendix.)Casa Grande Farms is considering purchasing multiple tractors for a total purchase price of
$540,000. These tractors are expected to generate EBITDA of $250,000 for each of the next three years. Casa
Grande Farms has a 21% tax rate and has a cost of capital of 10%.Assuming that Casa Grande Farms
depreciates these tractors using MACRS depreciation method for three-year property starting immediately,
then the annual depreciation tax shield in year 2 is closest to:
Select one:
A. $84,000.
B. $180,000.
C. $16,795.
D. $20,785.
Depreciation Tax Shield = $540,000 × .1481 × .21 = $16,795

Question 22
 Use the following information to answer the question(s) below.(Include the MACRS Table from the
depreciates these tractors straight line over the three-year life, then the NPV of buying the tractors is closest
to:
Select one:
A. $45,156.
B. $36,225.
C. $81,715.
D. $513,235.
Cash Flows (1 - 3) = ($250,000 - $540,000 × 1/3) × (1 - .21) + $540,000 × 1/3 = $235,300CF0 = - 540,000, CFj = 235,300, Nj = 3, I = 10, Compute NPV =
$45,156.27
Question 23
Use the following information to answer the question(s) below.(Include the MACRS Table from the
depreciates these tractors straight line over the three-year life, then the annual depreciation tax shield in
year 2 is closest to:
Select one:
A. $117,000.
B. $80,000.
C. $37,800.
D. $84,000.
Depreciation Tax Shield = ($540,000/3) × .21 = $37,800

Question 24
Use the following information to answer the question(s) below.Really Big Conglomerate (RBC) is considering
acquiring POP, Inc., a smaller unsuccessful Internet firm. POP has outstanding tax loss carryforwards of $320
million from losses over the past six years. RBC has pre-tax income of $100 million per year, a cost of capital
of 10%, and pays 21% in taxes. The Tax Cuts and Jobs Act of 2017 will limit RBC's ability to write off the
carryforwards to 80% of RBC's annual pre-tax income.If RBC acquires POP, then the NPV of POP tax loss
carryforwards to RBC is closest to:
Select one:
A. $236 million.
B. $53 million.
C. $262 million.

D. $320 million.
The total of $320 million in tax loss carryforwards will offset income of $80 million in years 1-4. The tax savings will be 21% of these amounts, so the
NPV of the tax loss carryforwards in millions is $16.8 million/(1.10)1 + $16.8 million/(1.10)2 + $16.8 million(1.10)3 + $16.8 million/(1.10)4 = $53.25 million
The correct answer is: $53 million.
Question 25
What is sensitivity analysis?
Question 26
Year 0 1 2 3
Sales (Revenues in
100,000100,000100,000
$)
- Cost of Goods
50,000 50,000 50,000
Sold (50% of Sales)
- Depreciation 30,000 30,000 30,000
= EBIT 20,000 20,000 20,000
- Taxes (21%) 4200 4200 4200
= Unlevered Net
15,800 15,800 15,800
Income
+ Depreciation 30,000 30,000 30,000
+ Changes to
-5000 -5000 10,000
Working Capital
- Capital
-90,000
Expenditures
Epiphany would like to know how sensitive the project's NPV is to changes in the discount rate. How much
Epiphany would like to know how sensitive the project s NPV is to changes in the discount rate. How much
 can the discount rate vary before the NPV reaches zero?
Question 27
The difference between scenario analysis and sensitivity analysis is that:

Select one:
A. scenario analysis is based upon the IRR and sensitivity analysis is based upon NPV.
B. only sensitivity analysis allows us to change our estimated inputs of our NPV analysis.
C. only scenario analysis considers the effect on NPV of changing multiple project parameters. 
D. only scenario analysis breaks the NPV calculation into its component assumptions.
The correct answer is: only scenario analysis considers the effect on NPV of changing multiple project parameters.
Question 28
Year 0 1 2 3
Sales (Revenues in
100,000100,000100,000
$)
- Cost of Goods
50,000 50,000 50,000
Sold (50% of Sales)
- Depreciation 30,000 30,000 30,000
= EBIT 20,000 20,000 20,000
- Taxes (21%) 4200 4200 4200
= Unlevered Net
15,800 15,800 15,800
Income
+ Depreciation 30,000 30,000 30,000
+ Changes to
-5000 -5000 10,000
Working Capital
C it l
- Capital
 -90,000
Expenditures
Epiphany is worried about the reliability of the sales forecast. How sensitive is the project's NPV to a 10%
change in sales?
Question 29
Year 0 1 2 3
Sales (Revenues in
100,000100,000100,000
$)
- Cost of Goods
50,000 50,000 50,000
Sold (50% of Sales)
- Depreciation 30,000 30,000 30,000
= EBIT 20,000 20,000 20,000
- Taxes (21%) 4200 4200 4200
= Unlevered Net
15,800 15,800 15,800
Income
+ Depreciation 30,000 30,000 30,000
+ Changes to
-5000 -5000 10,000
Working Capital
- Capital
-90,000
Expenditures
Epiphany would like to know how sensitive the project's NPV is to changes in the discount rate. How much
can the discount rate vary before the NPV reaches zero?
Select one:
A. 19.14%
B. 11.09
C. 0%
D. 12.0%
Year 0 1 2 3
Sales (Revenues in $) 100,000 100,000 100,000
- Cost of Goods Sold (50% of
50,000 50,000 50,000
Sales)
Sales)
 - Depreciation 30,000 30,000 30,000

= EBIT 20,000 20,000 20,000
- Taxes (21%) 4200 4200 4200
= Unlevered Net Income 15,800 15,800 15,800
+ Depreciation 30,000 30,000 30,000
+ Changes to Working Capital -5000 -5000 10,000
- Capital Expenditures -90,000
= Free Cash Flow -90,000 40,800 40,800 55,800

PV of FCF (FCF/(1 + I)n) -90,000 36,429 32,526 39,717
Discount Rate 0.12
NPV = 18,671
IRR = 23.09%
So, the discount rate can vary by 23.09% - 12% = 11.09%
The correct answer is: 11.09
Question 30

Select one:
A. To compute the NPV for a project, you need to estimate the incremental cash flows and choose a discount rate.
B. Sensitivity analysis allows us to explore the effects of errors in our estimated inputs in our NPV analysis for the project.
C. Estimates of the cash flows and cost of capital are often subject to significant uncertainty.
D. When we are certain regarding the input to a capital budgeting When we are UNCERTAIN regarding the input to a capital budgeting
decision, it is often useful to determine the break-even level of  decision, it is often useful to determine the break-even level of that
that input. input.
When we are UNCERTAIN regarding the input to a capital budgeting decision, it is often useful to determine the break-even level of that input.
When we are UNCERTAIN regarding the input to a capital budgeting decision, it is often useful to determine the break-even level of that input.
The correct answer is: When we are certain regarding the input to a capital budgeting decision, it is often useful to determine the break-even level of that
input.
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Бүлгийн сорил тест - Капиталын төсөвлөлт - Attempt review

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Бүлгийн сорил тест - Капиталын төсөвлөлт - Attempt review

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10/5/23, 12:34 PM Бүлгийн сорил тест - Капиталын төсөвлөлт: Attempt review

Started on Monday, 25 September 2023, 11:24 AM

Completed on Monday, 25 September 2023, 11:47 AM

Time taken 22 mins 11 secs

Grade 16.67 out of 100.00

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= ($80 million - $35 million) × .21 = $9.45 million

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Incremental Earnings Forecast ($)

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= $80 million × .21 =

= $80 million × .21 = $16.8 million

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A. considered as part of the initial investment in the project.

The correct answer is: a sunk cost.

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Which of the following statements is FALSE?

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Which of the following statements is FALSE?

A. Depreciation is not a cash expense paid by the firm.

B. Net Working Capital = Cash + Inventory + Payables - Receivables.

D. Earnings do not represent real profits.

Net Working Capital = Cash + Inventory + Receivables - Payables.

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Networking Capital Forecast ($)

 The correct answer is: An increase of $360.

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NPV = - $600,000 = $400,000

The correct answer is: $400,000

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B. Install the new grill since IRR is approximately = 15% 

C. Install the new grill since NPV is approximately = + $16,183

D. Do not install the new grill since NPV is approximately = - $16,183

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The tax shield will last for $320 million/($100

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Depreciation Tax Shield = $540,000 × .1481 × .21 = $16,795

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Depreciation Tax Shield = ($540,000/3) × .21 = $37,800

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What is sensitivity analysis?

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The difference between scenario analysis and sensitivity analysis is that:

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 - Depreciation 30,000 30,000 30,000