Multiple Choice (each question can have 0, 1, 2, 3 or 4 answers;

1 point for each correct answeron answer, +1 point for a complete correct set)

7. Opportunity costs: Y) exist whenever a firm has to choose how to allocate scarce resources 2) measures lost opportunities when deciding whether or not to accept a new project a cost that has already been incurred and cannot be recovered an expense that has already been paid or is obligated to be paid in the BB) future, regardless of whether a particular project is undertaken 8 Sunk costs: exist whenever a firm has to choose how to allocate scarce resources measures lost opportunities when deciding whether or not to accept a DD) new project EE) a cost that has already been incurred and cannot be recovered an expense that has already been paid or is obligated to be paid in the future, regardless of whether a particular project is undertaken 9. Operating Cash Flow can only be positive HH) must be negative II) EBIT (1-tax rate) Depreciation II) can be either negative or positive 10. Net Working Capital KK) LL) has no impact on the fair value of a company's equity is a measurement of how much capital is needed to run the operations must be adjusted in looking at forecasted or future cash flows of a equals current assets less current liabilities of a company MM) project NN) 11. Internal Rate of Return (IRR): 00) where we solve for the interest rate that makes the NPV equal to zero PP) where we accept the project if the IRR