Analysts at Tabby Fur Storage predict that the net present value of a proposed new $10 million warehouse is $1 million. How should these findings be interpreted?
A) Although NPV is positive, its value is too low for such a large expenditure and as a result, the project should be rejected.
B) The project should be rejected because the NPV is less than the cost of the warehouse.
C) The project should be accepted because it will add value to the firm.
D) More information such as the payback period should be evaluated since the reliance on only one capital budgeting technique should be discouraged.
E) The project does not meet the acceptance criteria of the NPV method and should be rejected.
C
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Indra K. Nooyi is chief executive of:
A) Nissan Motor (Japan). B) PepsiCo (USA). C) Ford Motor Company (USA). D) Pharmacia Corporation (USA). E) Atlas Copco AB (Sweden).
Which of the following is true?
A) A will can never be revoked. B) A will can never be changed. C) Everyone dies with a will. D) A will can be revoked.
To be sufficient under the Statute of Frauds, a writing must be signed by all parties
Indicate whether the statement is true or false
The ZYX Corporation is planning to request a line of credit from its bank and wants to estimate its cash needs
for the month of September. The following sales forecasts have been made for 2010: July $500,000 August 400,000 September 300,000 October 200,000 November 100,000 Collection estimates were obtained from the credit collection department as follows: 20% collected within the month of sale; 70% collected the first month following this sale; and 10% collected the second month following the sale. Payments for labor and raw materials are typically made in the month in which these costs are incurred. Total labor and raw material costs each month are 50% of sales. General administrative expenses are $30,000 per month, lease payments are $10,000 per month, and depreciation charges are $20,000 per month. The corporation tax rate is 40%; however, no corporate taxes are paid in September. Prepare a pro forma income statement and cash budget for September.