An agency problem is created when a financial manager: Agrees to lower selling prices if doing so will increase the net profits. Agrees to pay bonuses based on the market value of the company stock. Refuses to borrow money when doing so will decrease the value of the firm. Refuses a merger that is not favoured by shareholders. None of the above statements describes an agency problem. Which of the following is a good financial management decision? One that minimizes long term debt. One that maximizes the value of the firm's existing stock. One that maximizes the profit margin of the firm. One that maximizes the sales of the firm. One that maximizes short term assets. All else constant, which of the following is correct? Larger CCA rates reduce taxes for a corporation. B The half year rule permits firms to calculate CCA over the life of the asset on only half of the asset's installed cost. (C) As a firm deducts depreciation, the market value of its assets decreases. D Capital cost allowance is the monies a firm has to spend to purchase its fixed assets. (E) Capital cost allowance has no effect on the net income of the firm