Lines showing the alternatives from decision nodes and the outcomes from chance nodes are called _____
a. weights
b. payoffs
c. diagonals
d. branches
D
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For Proposal 1, the initial outlay equals ________. (See Table 11.2)
A) $1,380,000 B) $1,440,000 C) $1,500,000 D) $1,620,000
Answer the following statements true (T) or false (F)
1. The basis of a partnership interest is equal to the sum of money contributed plus the FMV of the property transferred to the partnership. 2. A contribution of services to a partnership will result in recognition of compensation to the contributing partner equal to the fair market value of the services as well as an increase in partnership basis to the extent of the income recognized. 3. If a partner contributes property to a partnership, and that property is subject to a liability, the noncontributing partners increase the basis of their partnership interests by their share of the partnership liabilities that were transferred to the partnership. 4. The partnership's assumption of a liability from a partner is treated as a cash distribution to the partner whose liability is assumed, which decreases his basis in the partnership.
Suppose a company issued 30-year bonds 4 years ago, when the yield curve was inverted. Since then long-term rates (10 years or longer) have remained constant, but the yield curve has resumed its normal upward slope. Under such conditions, a bond refunding would almost certainly be profitable.
Answer the following statement true (T) or false (F)
A company's hurdle rate is generally influenced by:
A. the firm's depreciable assets. B. both the cost of capital and project risk. C. whether management uses the net-present-value method or the internal-rate-of-return method. D. the cost of capital. E. project risk.