7) Lithium, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Lithium, Inc.'s required rate of return for these projects is 10%. The profitability index for Project A is

Select one: a. 1.17 b. 1.22 c. 1.12 d. 1.27

8) Which of the following statements best represents the "Agency Problem"?

Select one: a. the agency problem may interfere with the implementation of maximizing shareholder wealth b. the agency problem results from the separation of management and the ownership of the firm c. managers might attempt to benefit themselves in terms of salary and perquisites at the expense of shareholders d. all of the above

10 ) Which of the following categories of owners have unlimited liability?

Select one: a. both A and B b. general partners in a limited partnership c. sole proprietors d. shareholders of a corporation

12) The increase in owners' equity for a given period is equal to

Select one: a. sales minus dividends b. gross profit minus distributions to shareholders c. net income minus dividends d. positive net cash flow minus dividends4