Answer the following statements true (T) or false (F)
1. The residual value is discounted as a single lump sum because it will be received only once, when the asset is sold.
2. The net present value method of evaluating capital investments suggests that an investment with discounted net cash inflows which exceed the initial cost of the investment is desirable.
3. The present value of future cash inflows received in earlier years is higher than future cash inflows received in later years.
4. An opportunity cost is the benefit foregone by choosing an alternative course of action.
5. When a company is evaluating an investment proposal with high risk, a low discount rate should be used.
1. TRUE
2. TRUE
3. TRUE
4. TRUE
5. FALSE
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Cornel and Deanna resolve their dispute over the subsidence of Cornel’s real property due to Deanna’s excavation for an irrigation pond by having a neutral third party render a binding decision. This is
A. arbitration. B. conciliation. C. intervention. D. rendition.
Fool Proof Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. What is the Year 1 cash flow? Equipment cost (depreciable basis)$48,000 Sales revenues, each year$60,000 Operating costs (excl. depr.)$25,000 Tax rate35.0% ?
A. $29,426 B. $33,387 C. $28,294 D. $28,860 E. $29,709
Which of the following statements about the contribution-margin approach is FALSE?
A. It focuses on controllable costs-rather than on total costs. B. It is concerned with the amount contributed by an item or group of items toward covering fixed costs. C. Top management almost always finds this approach more useful than full-cost analysis. D. This approach frequently leads to data that suggest a different decision than might be indicated by the full-cost approach. E. This approach suggests that it is not necessary to consider all costs in all situations.
Which of the following is not a rating factor in ocean marine insurance?
A) Seaworthiness of the ship B) Experience of the captain and crew C) Route to be traveled D) Experience of the cargo shippers