Assume that you went to Las Vegas and hit the jackpot for $5 million. Further assume that you were offered a choice to receive the $5 million today, or receive it in two years. According to one of the principles of finance, which would you take?
A) the $5 million today because it would be worth more than if you would receive it in two years
B) the $5 million in two years because it would be worth more than if you would receive it today
C) You would be indifferent as to when you would receive the $5 million.
D) the $5 million in two years because you would be afraid of spending it all right away
A
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Cognitive dissonance theory predicts that individuals will decipher ambiguous information so it seems to be congruent with established beliefs. This is known as ______.
A. selective exposure B. selective attention C. selective interpretation D. selective retention
If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?
A. 1.90% B. 2.09% C. 2.30% D. 2.53% E. 2.78%
The management of Schenk Corporation is investigating automating a process by replacing old equipment by a new machine. The old equipment would be sold for scrap now for $13,000. The new machine would cost $648,000, would have a 9 year useful life, and would have no salvage value. By automating the process, the company would save $186,000 per year in cash operating costs. (Ignore income taxes.)Required:Determine the simple rate of return on the investment to the nearest tenth of a percent.
What will be an ideal response?
Which of the following statements is true regarding variable costing?
A. Only manufacturing costs that change in total with changes in production level are included in product costs. B. It makes it easier to manipulate earnings with changes in production levels. C. It is not permitted to be used for managerial reporting. D. It treats overhead in the same manner as absorption costing. E. It is a traditional costing approach.