The increased risk of foreign investments is most often incorporated in capital budgeting models by
A) international diversification.
B) hedging with financial derivatives.
C) reducing market risk.
D) calculating certainty equivalents.
E) adjusting the discount rate.
E
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A wash sale:
A. comes under the liability provisions of the 1934 Act. B. occurs each time new securities are issued. C. refers to a legal activity that manipulates the price of a security. D. is a violation under Section 10(b) of the 1934 Act.
Donna owns a hair salon. Though Donna pays stylists good wages, she finds it difficult to retain talented employees. Her business remains profitable, but since her customers tend to prefer to stick with their favorite stylists, turnover has caused her to lose several valuable clients. With which type of resource is Donna struggling?
a. human b. financial c. physical d. informational
[The following information applies to the questions displayed below.] Galaxy, Inc., a manufacturer of telescopes, began operations on June 1 of the current year. During this time, the company produced 60,000 units and sold 40,000 units at a sales price of $600 per unit. Cost information for this year is shown in the following table:Production costs Direct materials$90per unitDirect labor$75per unitVariable overhead$4per unitFixed overhead$420,000in totalNon-production costs Variable selling and administrative$80,000in totalFixed selling and administrative$520,000in totalGiven the Galaxy, Inc. data, what is net income using absorption costing?
A. $16,360,000 B. $17,400,000 C. $16,800,000 D. $11,275,000 E. $16,220,000
A project requires a current expenditure of $300 and expects to generate $100 cash inflows at the end of each of the next 5 years. What conclusion can be drawn from examining an NPV profile for this project?
A) Accept the project if the cost of capital exceeds 20% B) Accept the project if the cost of capital is below 20% C) Reject the project if the cost of capital exceeds 10% D) Reject the project if the cost of capital exceeds 7% E) Reject the project if the cost of capital exceeds 5%