Reading 44: Capital Budgeting - LOS f ～ Q1-3 describes, following, capital, likely, period

mayanfang1

Q1. Mollette Industries uses the payback period as its primary means for ranking capital projects. Which of the following most likely describes Mollette Industries with regard to location and management education?

          Location                                         Management education

 

A)  U.S. based firm                     Undergraduate degree or lower

B)  European-based firm          MBA degree or higher

C)  European-based firm          Undergraduate degree or lower

Q2. Garner Corporation is investing $30 million in new capital equipment. The present value of future after-tax cash flows generated by the equipment is estimated to be $50 million. Currently, Garner has a stock price of $28.00 per share with 8 million shares outstanding. Assuming that this project represents new information and is independent of other expectations about the company, what should the effect of the project be on the firm’s stock price?

A)   The stock price will increase to $30.50.

B)   The stock price will increase to $34.25.

C)   The stock price will remain unchanged.

Q3. Osborn Manufacturing uses the NPV and IRR methods as its primary tools for evaluating capital projects. Which of the following most likely describes Osborn Manufacturing with regard to firm ownership and company size?

          Firm ownership                 Company size

 

A)      Public                              Small

B)      Private                             Large

C)      Public                              Large

 

kepei7763

thx

zsd425

 谢谢

petitemango

 11

cheifmic

 thanks

yenchun13

 thanks for sharing.

cheifmic

 thx

tangfaxi

谢谢

btz2009

佛祖保佑您

xwsh0325

d