Which of the following statements is CORRECT? Assume that all projects being considered have normal cash flows and are equally risky.
A. If a project's IRR is equal to its cost of capital, then under all reasonable conditions, the project's IRR must be negative.
B. If a project's IRR is equal to its cost of capital, then under all reasonable conditions the project's NPV must be zero.
C. There is no necessary relationship between a project's IRR, its cost of capital, and its NPV.
D. When evaluating mutually exclusive projects, those projects with relatively long lives will tend to have relatively high NPVs when the cost of capital is relatively high.
E. If a project's IRR is equal to its cost of capital, then, under all reasonable conditions, the project's NPV must be negative.
Answer: B
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Parker Company owns 83% of the outstanding stock of Tadeo Company. Parker Company is referred to as the
a. parent b. minority interest c. affiliate d. subsidiary
If a company sells merchandise with credit terms 2/10 n/60, the credit period is 10 days and the discount period is 60 days.
Answer the following statement true (T) or false (F)
The supporters of ______________ argue that this framework is the only ethical mold that captures the essence of motivation within individuals.
a. Utilitarianism b. Sidgwick’s Dualism c. Ethical Egoism d. Kant’s Ethics
Balerio Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows:??Average Cost per Unit?Direct materials$6.80?Direct labor$3.20?Variable manufacturing overhead$1.60?Fixed manufacturing overhead$13.50?Fixed selling expense$2.25?Fixed administrative expense$1.80?Sales commissions$0.50?Variable administrative expense$0.40Required:a. For financial reporting purposes, what is the total amount of product costs incurred to make 9,000 units?b. If 10,000 units are sold, what is the variable cost per unit sold?c. If 10,000 units are sold, what is the total amount of variable costs related to the units sold?d. If the selling price is $18.20 per unit, what is the contribution margin
per unit sold?e. What incremental manufacturing cost will the company incur if it increases production from 9,000 to 9,001 units? What will be an ideal response?