Question 1

Fixed costs:

Accepted Answer

A) change as a small quantity of output produced changes. 
B) are constant over the short-run regardless of the quantity of output produced. 
C) are defined as the change in total costs when one more unit of output is produced. 
D) are subtracted from sales to compute the contribution margin. 
E) can be ignored in scenario analysis since they are constant over the life of a project. 
A) change as a small quantity of output produced changes. 
B) are constant over the short-run regardless of the quantity of output produced. 
C) are defined as the change in total costs when one more unit of output is produced. 
D) are subtracted from sales to compute the contribution margin. 
E) can be ignored in scenario analysis since they are constant over the life of a project.

Question 2

PC Enterprises wants to commence a new project but is unable to obtain the financing under any circumstances.This firm is facing:

Accepted Answer

A) financial deferral. 
B) financial allocation. 
C) capital allocation. 
D) marginal rationing. 
E) hard rationing. 
A) financial deferral. 
B) financial allocation. 
C) capital allocation. 
D) marginal rationing. 
E) hard rationing.

Question 3

Which one of the following will be used in the computation of the best-case analysis of a proposed project?

Accepted Answer

A) minimal number of units that are expected to be produced and sold 
B) the lowest expected salvage value that can be obtained for a project's fixed assets 
C) the most anticipated sales price per unit 
D) the lowest variable cost per unit that can reasonably be expected 
E) the highest level of fixed costs that is actually anticipated 
A) minimal number of units that are expected to be produced and sold 
B) the lowest expected salvage value that can be obtained for a project's fixed assets 
C) the most anticipated sales price per unit 
D) the lowest variable cost per unit that can reasonably be expected 
E) the highest level of fixed costs that is actually anticipated

Question 4

Valerie just completed analyzing a project.Her analysis indicates that the project will have a 6-year life and require an initial cash outlay of $320,000.Annual sales are estimated at $589,000 and the tax rate is 34 percent.The net present value is a negative $320,000.Based on this analysis,the project is expected to operate at the:

Accepted Answer

A) maximum possible level of production. 
B) minimum possible level of production. 
C) financial break-even point. 
D) accounting break-even point. 
E) cash break-even point. 
A) maximum possible level of production. 
B) minimum possible level of production. 
C) financial break-even point. 
D) accounting break-even point. 
E) cash break-even point.

Question 5

Sensitivity analysis determines the:

Accepted Answer

A) range of possible outcomes given that most variables are reliable only within a stated range. 
B) degree to which the net present value reacts to changes in a single variable. 
C) net present value range that can be realized from a proposed project. 
D) degree to which a project relies on its fixed costs. 
E) ideal ratio of variable costs to fixed costs for profit maximization. 
A) range of possible outcomes given that most variables are reliable only within a stated range. 
B) degree to which the net present value reacts to changes in a single variable. 
C) net present value range that can be realized from a proposed project. 
D) degree to which a project relies on its fixed costs. 
E) ideal ratio of variable costs to fixed costs for profit maximization.

Question 6

Which of the following statements are identified with financial break-even point?
I.The present value of the cash inflows exactly offsets the initial cash outflow.
II.The payback period is equal to the life of the project.
III.The NPV is zero.
IV.The discounted payback period equals the life of the project.

Accepted Answer

A) I and II only 
B) I and III only 
C) II and IV only 
D) I, II, and III only 
E) I, III, and IV only 
A) I and II only 
B) I and III only 
C) II and IV only 
D) I, II, and III only 
E) I, III, and IV only

Fixed costs:

PC Enterprises wants to commence a new project but is unable to obtain the financing under any circumstances.This firm is facing:

Which one of the following will be used in the computation of the best-case analysis of a proposed project?

Sensitivity analysis determines the:

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters

Exam 11: Project Analysis and Evaluation

Fixed costs:

PC Enterprises wants to commence a new project but is unable to obtain the financing under any circumstances.This firm is facing:

Which one of the following will be used in the computation of the best-case analysis of a proposed project?

Sensitivity analysis determines the:

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters