Question 1

-What is operating leverage and why is it important in the analysis of capital expenditure projects?

Accepted Answer

Operating leverage is the degree to whic

Question 2

The base case values used in scenario analysis are the ones considered the most:

Accepted Answer

A)  optimistic. 
B)  desired by management. 
C)  pessimistic. 
D)  conducive to creating a positive net present value. 
E)  likely to occur. 
A)  optimistic. 
B)  desired by management. 
C)  pessimistic. 
D)  conducive to creating a positive net present value. 
E)  likely to occur.

Question 3

Simulation analysis is based on assigning a _____ and analyzing the results.

Accepted Answer

A)  narrow range of values to a single variable 
B)  narrow range of values to multiple variables simultaneously 
C)  wide range of values to a single variable 
D)  wide range of values to multiple variables simultaneously 
E)  single value to each of the variables 
A)  narrow range of values to a single variable 
B)  narrow range of values to multiple variables simultaneously 
C)  wide range of values to a single variable 
D)  wide range of values to multiple variables simultaneously 
E)  single value to each of the variables

Question 4

-A project has a unit price of $5,000,a variable cost per unit of $3,750,fixed costs of $17,000,000,and depreciation expense of $6,970,000.What is the accounting break-even quantity?

Accepted Answer

A)  6,970 units 
B)  10,030 units 
C)  17,000 units 
D)  18,470 units 
E)  19,176 units 
A)  6,970 units 
B)  10,030 units 
C)  17,000 units 
D)  18,470 units 
E)  19,176 units

Question 5

A proposed project has fixed costs of $36,000 per year.The operating cash flow at 18,000 units is $58,000.What will be the new degree of operating leverage if the number of units sold rises to 18,500?

Accepted Answer

A)  1.46 
B)  1.59 
C)  1.67 
D)  2.08 
E)  2.14 
A)  1.46 
B)  1.59 
C)  1.67 
D)  2.08 
E)  2.14

Question 6

Brubaker & Goss has received requests for capital investment funds for next year from each of its five divisions.All requests represent positive net present value projects.All projects are independent.Senior management has decided to allocate the available funds based on the profitability index of each project since the company has insufficient funds to fulfill all of the requests.Management is following a practice known as:

Accepted Answer

A)  scenario analysis. 
B)  sensitivity analysis. 
C)  leveraging. 
D)  hard rationing. 
E)  soft rationing. 
A)  scenario analysis. 
B)  sensitivity analysis. 
C)  leveraging. 
D)  hard rationing. 
E)  soft rationing.

-What is operating leverage and why is it important in the analysis of capital expenditure projects?

The base case values used in scenario analysis are the ones considered the most:

Simulation analysis is based on assigning a _____ and analyzing the results.

-A project has a unit price of $5,000,a variable cost per unit of $3,750,fixed costs of $17,000,000,and depreciation expense of $6,970,000.What is the accounting break-even quantity?

A proposed project has fixed costs of $36,000 per year.The operating cash flow at 18,000 units is $58,000.What will be the new degree of operating leverage if the number of units sold rises to 18,500?

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flowpart Two: Financial Statements and Long-Term Financial Planning

Working With Financial Statements

Long-Term Financial Planning and Growthpart Three: Valuation of Future Cash Flows

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuationpart Four: Capital Budgeting

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Return, Risk, and the Security Market Linepart Six: Cost of Capital and Long-Term Financial Policy

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policypart Seven: Short-Term Financial Planning and Management

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Managementpart Eight: Topics in Corporate Finance

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 Evaluationpart Five: Risk and Return

-What is operating leverage and why is it important in the analysis of capital expenditure projects?

The base case values used in scenario analysis are the ones considered the most:

Simulation analysis is based on assigning a _____ and analyzing the results.

-A project has a unit price of $5,000,a variable cost per unit of $3,750,fixed costs of $17,000,000,and depreciation expense of $6,970,000.What is the accounting break-even quantity?

A proposed project has fixed costs of $36,000 per year.The operating cash flow at 18,000 units is $58,000.What will be the new degree of operating leverage if the number of units sold rises to 18,500?

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flowpart Two: Financial Statements and Long-Term Financial Planning

Working With Financial Statements

Long-Term Financial Planning and Growthpart Three: Valuation of Future Cash Flows

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuationpart Four: Capital Budgeting

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Return, Risk, and the Security Market Linepart Six: Cost of Capital and Long-Term Financial Policy

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policypart Seven: Short-Term Financial Planning and Management

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Managementpart Eight: Topics in Corporate Finance

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters