Question 71
Which of the following statements about incremental cash flows in capital budgeting is most accurate? A) Since capital budgeting is based on cash flows rather than net accounting income, changes in noncash balance sheet accounts such as inventory are not relevant to the analysis. B) The cash flows for a project should include interest payments. C) Any cash flow that can be classified as a cash flow from financing is relevant in a capital budgeting project analysis. D) If an investment project would make use of property which the firm currently owns, the project should be charged with the opportunity cost (rental income) of the property. Question 72
Justin Lopez, CFA, is the Chief Financial Officer of Waterbury Corporation. Lopez has just been informed that the U.S. Internal Revenue Code may be revised such that the maximum marginal corporate tax rate will be increased. Since Waterbury’s taxable income is routinely in the highest marginal tax bracket, Lopez is concerned about the potential impact of the proposed change. Assuming that Waterbury maintains its target capital structure, which of the following is least likely to be affected by the proposed tax change?
A) Waterbury’s after-tax cost of noncallable, nonconvertible preferred stock. B) Waterbury’s after-tax cost of corporate debt. C) Waterbury’s weighted average cost of capital. D) Waterbury’s return on equity (ROE). Question 73
Which of the following is least likely to be considered a “best practice” regarding corporate governance?
A) A majority of the board that is not affiliated with the firm’s management. B) Board members are limited to a six-year term. C) Use of a third party to tabulate votes and retain voting records. D) A code of ethics that is audited and improved periodically. Question 74
Which of the following sources of liquidity is the most reliable?
A) Uncommitted line of credit. B) Committed line of credit. C) Revolving line of credit. D) Overdraft line of credit. Question 75
Which of the following is least accurate regarding the net present value (NPV) and internal rate of return (IRR) capital budgeting techniques?
A) The IRR is the discount rate that makes the net present value of a project’s cash flows zero. B) A project may have cash flows such that multiple IRRs exist. C) The crossover rate is the discount rate at which the NPVs of two projects are equal. D) If NPV and IRR project rankings conflict, the IRR method is preferred.
[此贴子已经被作者于2008-11-8 14:04:33编辑过] | 
发表于 2008-5-26 12:07
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