D Question 1 When calculating incremental cash flows, we should include interest financing expenses sunk costs...

    

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D Question 1 When calculating incremental cash flows, we should include interest financing expenses sunk costs opportunity costs Question 2 The cash flows that occur just because of a new project are called marginal cash flows project cash flows i @additional cash flows incremental cash flows Question 3 Sun Corp. uses a discount rate of 6% for below-average risk projects, 8% for average-risk projects, and 10% for above-average risk projects. Which of the following independent projects should Sun accept? Project A has below average risk and an IRR- 6.5% We need information about the projects NPVs to make a decision. Project C has above-average risk and an IRR-9:5% Project has average risk and an IRR-7.5% 2 pts 2 2 pts D U 0 Question 4 Side effects (externalities) from a project can be positive or negative positive only indeterminate Onegative only Question 5 Which of these items does NOT add to or subtract from free cash flow by its full amount? Taxes Depreciation Opportunity costs Side effects Question 6 Even though depreciation is not a cash outflow, we should consider it in capital budgeting because O asset values depreciate over time it changes EBIT, which is a cash outflow accounting rules requim asset depreciation it changes tax liabilities, which are a cash outflow Question 7 2 pts 2 pm 2 pts 2 pts U D D Question 7 Which of the following items should be included in the cash flows used to estimate a project's NPVT All costs for project-related research and development up to now All costs associated with the project that have been incurred up to now The recovery of additional net working capital required for the project at the end of the project's life. Interest on bonds and loans used to finance the project Question 8 When calculating incremental cash flows, we should exclude taxes side effects sunk costs opportunity costs Question 9 Sunk costs are costs that have been incurred in the past and cannot be recouped fully will occur in the future IM may change based on the NPV of the project are due to a sunken ship 2 pt 2 pts 2 pts Question 10 When determining relevant cash flows for project evaluation, we should add back in interest expenses after subracting taxes ignore interest and other financing expenses discount interest expenses to the present subtract interest expenses from EBIT -2 pts D Question 1 When calculating incremental cash flows, we should include interest financing expenses sunk costs opportunity costs Question 2 The cash flows that occur just because of a new project are called marginal cash flows project cash flows i @additional cash flows incremental cash flows Question 3 Sun Corp. uses a discount rate of 6% for below-average risk projects, 8% for average-risk projects, and 10% for above-average risk projects. Which of the following independent projects should Sun accept? Project A has below average risk and an IRR- 6.5% We need information about the projects NPVs to make a decision. Project C has above-average risk and an IRR-9:5% Project has average risk and an IRR-7.5% 2 pts 2 2 pts D U 0 Question 4 Side effects (externalities) from a project can be positive or negative positive only indeterminate Onegative only Question 5 Which of these items does NOT add to or subtract from free cash flow by its full amount? Taxes Depreciation Opportunity costs Side effects Question 6 Even though depreciation is not a cash outflow, we should consider it in capital budgeting because O asset values depreciate over time it changes EBIT, which is a cash outflow accounting rules requim asset depreciation it changes tax liabilities, which are a cash outflow Question 7 2 pts 2 pm 2 pts 2 pts U D D Question 7 Which of the following items should be included in the cash flows used to estimate a project's NPVT All costs for project-related research and development up to now All costs associated with the project that have been incurred up to now The recovery of additional net working capital required for the project at the end of the project's life. Interest on bonds and loans used to finance the project Question 8 When calculating incremental cash flows, we should exclude taxes side effects sunk costs opportunity costs Question 9 Sunk costs are costs that have been incurred in the past and cannot be recouped fully will occur in the future IM may change based on the NPV of the project are due to a sunken ship 2 pt 2 pts 2 pts Question 10 When determining relevant cash flows for project evaluation, we should add back in interest expenses after subracting taxes ignore interest and other financing expenses discount interest expenses to the present subtract interest expenses from EBIT -2 pts

Answer rating: 100% (QA)

1 Opportunity Costs 2 Incremental Cash Flows 3 Pr... View the full answer