1.) The bottom-up method for forecasting sales

a. Relies on the ability of complex statistical models to predict individual unit or regional sales figures which are added together in reported to senior managers

b. Relies on the ability of senior managers to determine sales objectives for their companies products informed personnel about targets for each business

c. Relies on the ability of sales personnel to correctly apply statistical models in order to obtain firmwide objectives for increased sales

d. Relies on the ability of sales personnel to access further demand usually without the aid of statistical models

2.) A strategic plan is a ___

a. Forecast of the short-term inflows and outflows of a firm

b. Long-term guide driven by competitive forces

c. Projected financial statement typically based on the historical financial relationships within the firm

d. Short-term financial plan

3.) which following is correct?

1. Capital budgeting analysis for expansion and replacement projects is essentially the same because the types of cash flows involved are the same
2. In estimating incremental operating cash flows for the purpose of capital budgeting, interest payments should not be included since the effect of these payments are already included in the rate of return the firm is required to earn from its investment
3. When equipment is sold, companies receive a tax credit as long as the salvage value is less than the initial cost of equipment
4. If a firm has spent a large amount of money on the research and development of a new product, those costs should be included in the initial outlay of a capital budgeting analysis of whether to put the product into full production

4.) Which of the following statements is correct?

a. The NPV method assumes that cash flows will be reinvested at the required rate of return while the IRR method assumes reinvestment at the IRR.

b. The NPV method assumes that cash flows will be reinvested at the risk-free rate while the IRR method assumes reinvestment at the IRR.

c. The NPV method assumes that cash flows will be reinvested at the required rate of return while the IRR method assumes reinvestment at the risk-free rate.

d. The NPV method does not consider the inflation premium.

5.) Which of the following statements is correct?

a. Once a firm declares bankruptcy, it is liquidated by the trustee, who uses the proceeds to pay bondholders, unpaid wages, taxes, and lawyer fees.

b. A firm with a sinking fund payment coming due would generally choose to buy back bonds in the open market, if the price of the bond exceeds the sinking fund call price.

c. Income bonds pay interest only when the firm has sufficient income to cover the interest payments. Thus, these securities cannot bankrupt a company and this makes them riskier to investors than regular bonds.

d. One disadvantage of zero-coupon bonds is that issuing firms cannot realize the tax savings from issuing debt until the bonds mature.

6.) The sustainable growth model gives managers a kind of shorthand projection that ties together ___ and ____

a. growth objectives; financial needs

b. external funds required; strategic plan

c. growth objectives; cash receipts

d. the cash budget; strategic plan

7.) ___ flows result from debt and equality financing transactions.

1. Financing
2. Operating
3. Investment
4. cash