公司理財(cái)-習(xí)題庫(kù)-Chap010

公司理財(cái)-習(xí)題庫(kù)-Chap010公司理財(cái)-習(xí)題庫(kù)-Chap010公司理財(cái)-習(xí)題庫(kù)-Chap010xxx公司公司理財(cái)-習(xí)題庫(kù)-Chap010文件編號(hào)：文件日期：修訂次數(shù)：第1.0次更改批準(zhǔn)審核制定方案設(shè)計(jì)，管理制度CHAPTER10MakingCapitalInvestmentDecisionsI. DEFINITIONSINCREMENTALCASHFLOWSa 1. Thechangesinafirm’sfuturecashflowsthatareadirectconsequenceofacceptingaprojectarecalled_____cashflows. a. incremental b. stand-alone c. after-tax d. netpresentvalue e. erosionSTAND-ALONEPRINCIPLEb 2. Theevaluationofaprojectbasedsolelyonitsincrementalcashflowsisthebasisofthe: a. incrementalcashflowmethod. b. stand-aloneprinciple. c. dividendgrowthmodel. d. after-taxsalvagevalueanalysis. e. discountedpaybackmethod.SUNKCOSTSc 3. Acostthathasalreadybeenpaid,ortheliabilitytopayhasalreadybeenincurred,isa(n): a. salvagevalueexpense. b. networkingcapitalexpense. c. sunkcost. d. opportunitycost. e. erosioncost.OPPORTUNITYCOSTSd 4. Themostvaluableinvestmentgivenupifanalternativeinvestmentischosenisa(n): a. salvagevalueexpense. b. networkingcapitalexpense. c. sunkcost. d. opportunitycost. e. erosioncost.EROSIONCOSTSe 5. Thecashflowsofanewprojectthatcomeattheexpenseofafirm’sexistingprojectsarecalled: a. salvagevalueexpenses. b. networkingcapitalexpenses. c. sunkcosts. d. opportunitycosts. e. erosioncosts.

PROFORMAFINANCIALSTATEMENTSa 6. Aproformafinancialstatementisonethat: a. projectsfutureyears’operations. b. isexpressedasapercentageofthetotalassetsofthefirm. c. isexpressedasapercentageofthetotalsalesofthefirm. d. isexpressedrelativetoachosenbaseyear’sfinancialstatement. e. reflectsthepastandcurrentoperationsofthefirm.MACRSDEPRECIATIONb 7. ThedepreciationmethodcurrentlyallowedunderUStaxlawgoverningtheacceleratedwrite-offofpropertyundervariouslifetimeclassificationsiscalled_____depreciation. a. FIFO b. MACRS c. straight-line d. sum-of-yearsdigits e. curvilinearDEPRECIATIONTAXSHIELDc 8. Thecashflowtaxsavingsgeneratedasaresultofafirm’stax-deductibledepreciationexpenseiscalledthe: a. after-taxdepreciationsavings. b. depreciablebasis. c. depreciationtaxshield. d. operatingcashflow. e. after-taxsalvagevalue.CASHFLOWFROMPROJECTSd 9. Thecashflowfromprojectsforacompanyiscomputedasthe: a. netoperatingcashflowgeneratedbytheproject,lessanysunkcostsanderosioncosts. b. sumoftheincrementaloperatingcashflowandafter-taxsalvagevalueoftheproject. c. netincomegeneratedbytheproject,plustheannualdepreciationexpense. d. sumoftheincrementaloperatingcashflow,capitalspending,andnetworkingcapitalexpensesincurredbytheproject. e. sumofthesunkcosts,opportunitycosts,anderosioncostsoftheproject.EQUIVALENTANNUALCOSTe 10. Theannualannuitystreamofpaymentswiththesamepresentvalueasaproject’scostsiscalledtheproject’s_____cost. a. incremental b. sunk c. opportunity d. erosion e. equivalentannual

II. CONCEPTSINCREMENTALCASHFLOWb 11. Onepurposeofidentifyingalloftheincrementalcashflowsrelatedtoaproposed projectisto: a. isolatethetotalsunkcostssotheycanbeevaluatedtodetermineiftheprojectwill addvaluetothefirm. b. eliminateanycostwhichhaspreviouslybeenincurredsothatitcanbeomittedfrom theanalysisoftheproject. c. makeeachprojectappearasprofitableaspossibleforthefirm. d. includeboththeproposedandthecurrentoperationsofafirmintheanalysisofthe project. e. identifyanyandallchangesinthecashflowsofthefirmforthepastyearsotheycan beincludedintheanalysis.INCREMENTALCASHFLOWe 12. Whichofthefollowingareexamplesofanincrementalcashflow I. anincreaseinaccountsreceivable II. adecreaseinnetworkingcapital III. anincreaseintaxes IV. adecreaseinthecostofgoodssold a. IandIIIonly b. IIIandIVonly c. IandIVonly d. I,III,andIVonly e. I,II,III,andIVINCREMENTALCASHFLOWc 13. Whichoneofthefollowingisanexampleofanincrementalcashflow a. theannualsalaryofthecompanypresidentwhichisacontractualobligation b. therentonawarehousewhichiscurrentlybeingutilized c. therentonsomenewmachinerythatisrequiredforanupcomingproject d. thepropertytaxesonthecurrentlyownedwarehousewhichhasbeensittingidlebut isgoingtobeutilizedforanewproject e. theinsuranceonacompany-ownedbuildingwhichwillbeutilizedforanewprojectSTAND-ALONEPRINCIPLEd 14. Thestand-aloneprincipleadvocatesprojectanalysiswhichisfocusedon_____costs. a. sunk b. total c. variable d. incremental e. fixed

SUNKCOSTc 15. Sunkcostsincludeanycostthat: a. willchangeifaprojectisundertaken. b. willbeincurredifaprojectisaccepted. c. haspreviouslybeenincurredandcannotbechanged. d. ispaidtoathirdpartyandcannotberefundedforanyreasonwhatsoever. e. willoccurifaprojectisacceptedandonceincurred,cannotberecouped.SUNKCOSTd 16. Youspent$500lastweekfixingthetransmissioninyourcar.Now,thebrakesare actingupandyouaretryingtodecidewhethertofixthemortradethecarinfora newermodel.Inanalyzingthebrakesituation,the$500youspentfixingthe transmissionisa(n)_____cost. a. opportunity b. fixed c. incremental d. sunk e. relevantEROSIONb 17. Erosioncanbeexplainedasthe: a. additionalincomegeneratedfromthesalesofanewlyaddedproduct. b. lossofcurrentsalesduetoanewprojectbeingimplemented. c. lossofrevenueduetoemployeetheft. d. lossofrevenueduetocustomertheft. e. lossofcashduetotheexpensesrequiredtofixaparkinglotafteraheavyrainstorm.EROSIONa 18. Whichofthefollowingareexamplesoferosion I. thelossofsalesduetoincreasedcompetitionintheproductmarket II. thelossofsalesbecauseyourchiefcompetitorjustopenedastoreacrossthestreet fromyourstore III. thelossofsalesduetoanewproductwhichyourecentlyintroduced IV. thelossofsalesduetoanewproductrecentlyintroducedbyyourcompetitor a. IIIonly b. IIIandIVonly c. I,IIIandIVonly d. IIandIVonly e. I,II,III,andIV

TYPESOFCOSTSd 19. Whichofthefollowingshouldbeincludedintheanalysisofaproject I. sunkcosts II. opportunitycosts III. erosioncosts IV. incrementalcosts a. IandIIonly b. IIIandIVonly c. IIandIVonly d. II,III,andIVonly e. I,II,andIVonlyNETWORKINGCAPITALd 20. Allofthefollowingareanticipatedeffectsofaproposedproject.Whichofthese shouldbeincludedintheinitialprojectcashflowrelatedtonetworkingcapital I. aninventorydecreaseof$5,000 II. anincreaseinaccountsreceivableof$1,500 III. anincreaseinfixedassetsof$7,600 IV. adecreaseinaccountspayableof$2,100 a. IandIIonly b. IandIIIonly c. IIandIVonly d. I,II,andIVonly e. I,II,III,andIVNETWORKINGCAPITALa 21. Changesinthenetworkingcapital: a. canaffectthecashflowsofaprojecteveryyearoftheproject’slife. b. onlyaffecttheinitialcashflowsofaproject. c. areincludedinprojectanalysisonlyiftheyrepresentcashoutflows. d. aregenerallyexcludedfromprojectanalysisduetotheirirrelevancetothetotal project. e. affecttheinitialandthefinalcashflowsofaprojectbutnotthecashflowsofthe middleyears.NETWORKINGCAPITALc 22. Whichoneofthefollowingwilldecreasenetworkingcapitalofafirm a. adecreaseinaccountspayable b. anincreaseininventory c. adecreaseinaccountsreceivable d. anincreaseinthefirm’scheckingaccountbalance e. adecreaseinfixedassets

NETWORKINGCAPITALd 23. Networkingcapital: a. canbeignoredinprojectanalysisbecauseanyexpenditureisnormallyrecoupedbythe endoftheproject. b. requirementsgenerally,butnotalways,createacashinflowatthebeginningofa project. c. expenditurescommonlyoccurattheendofaproject. d. isfrequentlyaffectedbytheadditionalsalesgeneratedbyanewproject. e. istheonlyexpenditurewhereatleastapartialrecoverycanbemadeattheendofa project.PROFORMAINCOMESTATEMENTb 24. Theproformaincomestatementforacostreductionproject: a. willreflectareductioninthesalesofthefirm. b. willgenerallyreflectnoincrementalsales. c. hastobepreparedreflectingthetotalsalesandexpensesofafirm. d. cannotbepreparedduetothelackofanyprojectrelatedsales. e. willalwaysreflectanegativeprojectoperatingcashflow.PROFORMASTATEMENTSe 25. Proformastatementsforaproposedprojectshould: I. becompiledonastand-alonebasis. II. includealltheincrementalcashflowsrelatedtoaproject. III. generallyexcludeinterestexpense. IV. includeallproject-relatedfixedassetacquisitionsanddisposals. a. IandIIonly b. IIandIIIonly c. I,II,andIVonly d. II,III,andIVonly e. I,II,III,andIVPROJECTCASHFLOWSb 26. Whichoneofthefollowingstatementsiscorrect a. Projectanalysisshouldonlyincludethecashflowswhichaffecttheincomestatement. b. Aprojectcancreateapositivecashflowfromoperationswithoutaffectingthesales levelofafirm. c. Forthemajorityofprojectsthatincreasesales,therewillbeacashoutflowrelated tonetworkingcapitalthatoccursattheendoftheproject. d. Interestexpenseshouldalwaysbeincludedasacashoutflowwhenanalyzinga project. e. Theopportunitycostofacompany-ownedbuildingthatisgoingtobeusedinanew projectshouldbeincludedasacashinflowtotheproject.MACRSd 27. AcompanywhichusestheMACRSsystemofdepreciation: a. willhaveequaldepreciationcostseachyearofanasset’slife. b. willexpensethecostofnonresidentialrealestateoveraperiodof7years. c. candepreciatethecostofland,iftheysodesire. d. willwriteofftheentirecostofanassetovertheasset’sclasslife. e. cannotexpenseanyofthecostofanewassetduringthefirstyearoftheasset’slife.

MACRSa 28. Bet‘rBiltToysjustpurchasedsomeMACRS5-yearpropertyatacostof$230,000. Whichofthefollowingwillcorrectlygiveyouthebookvalueofthisequipmentatthe endofyear2 MACRS5-yearproperty Year Rate 1 % 2 % 3 % 4 % 5 % 6 % I. 52percentoftheassetcost II. 48percentoftheassetcost III. 68percentof80percentoftheassetcost IV. theassetcost,minus20percentoftheassetcost,minus32%of80%oftheassetcost a. IIonly b. IIIandIVonly c. IandIIIonly d. IIandIVonly e. I,II,III,andIVMACRSe 29. WillDo,Inc.justpurchasedsomeequipmentatacostof$650,000.Whatisthe propermethodologyforcomputingthedepreciationexpenseforyear3ifthe equipmentisclassifiedas5-yearpropertyforMACRS MACRS5-yearproperty Year Rate 1 % 2 % 3 % 4 % 5 % 6 % a. $650,000 b. $650,000 c. $650,000(1+.20)(1+.32)(1+.192) d. $650,000 e. $650,000.192BOOKVALUEd 30. Thebookvalueofanassetisprimarilyusedtocomputethe: a. annualdepreciationtaxshield. b. amountofcashreceivedfromthesaleofanasset. c. amountoftaxsavedannuallyduetothedepreciationexpense. d. amountoftaxdueonthesaleofanasset. e. changeindepreciationneededtoreflectthemarketvalueoftheasset.

BOOKVALUEa 31. Thebookvalueofanassetwill: a. remainconstantiftheassetisland. b. varyasthemarketvalueoftheassetvaries. c. decreaseataconstantratewhenMACRSdepreciationisused. d. increaseoverthetaxlifeoftheasset. e. decreasefasterunderstraight-linedepreciationthanunderMACRS.SALVAGEVALUEc 32. Thesalvagevalueofanassetcreatesanafter-taxcashinflowtothefirminanamount equaltothe: a. salespriceoftheasset. b. salespriceminusthebookvalue. c. salespriceminusthetaxduebasedonthesalespriceminusthebookvalue. d. salespriceplusthetaxduebasedonthesalespriceminusthebookvalue. e. salespriceplusthetaxduebasedonthebookvalueminusthesalesprice.SALVAGEVALUEe 33. Thepre-taxsalvagevalueofanassetisequaltothe: a. bookvalueifstraight-linedepreciationisused. b. bookvalueifMACRSdepreciationisused. c. marketvalueminusthebookvalue. d. bookvalueminusthemarketvalue. e. marketvalue.PROJECTOCFa 34. Aproject’soperatingcashflowwillincreasewhen: a. thedepreciationexpenseincreases. b. thesalesprojectionsarelowered. c. theinterestexpenseislowered. d. thenetworkingcapitalrequirementincreases. e. theearningsbeforeinterestandtaxesdecreases.PROJECTCASHFLOWSc 35. Thecashflowsofaprojectshould: a. becomputedonapre-taxbasis. b. includeallsunkcostsandopportunitycosts. c. includeallincrementalcosts,includingopportunitycosts. d. beappliedtotheyearwhentherelatedexpenseorincomeisrecognizedbyGAAP. e. includeallfinancingcostsrelatedtonewdebtacquiredtofinancetheproject.

PROJECTOCFa 36. Whichofthefollowingarecorrectmethodsforcomputingtheoperatingcashflowof aprojectassumingthattheinterestexpenseisequaltozero I. EBIT+D-T II. EBIT+D+T III. NI+D IV. (Sales–Costs)(T+D)(1-T) a. IandIIIonly b. IIandIVonly c. IIandIIIonly d. I,III,andIVonly e. II,III,andIVonlyPROJECTCASHFLOWSd 37. Thecashflowsofaprojectshouldincludetherelatedchangesinwhichofthe followingaccounts I. taxes II. accountspayable III. fixedassets IV. long-termdebt a. IandIIonly b. IIIandIVonly c. IandIIIonly d. I,II,andIIIonly e. I,II,III,andIVBOTTOM-UPOCFb 38. Thebottom-upapproachtocomputingtheoperatingcashflowappliesonlywhen: a. boththedepreciationexpenseandtheinterestexpenseareequaltozero. b. theinterestexpenseisequaltozero. c. theprojectisacost-cuttingproject. d. nofixedassetsarerequiredfortheproject. e. taxesareignoredandtheinterestexpenseisequaltozero.TOP-DOWNOCFa 39. Thetop-downapproachtocomputingtheoperatingcashflow: a. ignoresallnoncashitems. b. appliesonlyifaprojectproducessales. c. canonlybeusediftheentirecashflowsofafirmareincluded. d. isequaltosales-costs-taxes+depreciation. e. includestheinterestexpenserelatedtoaproject.TAXSHIELDd 40. Anincreaseinwhichoneofthefollowingwillincreasetheoperatingcashflow a. employeesalaries b. officerent c. buildingmaintenance d. equipmentdepreciation e. equipmentrentalTAXSHIELDc 41. Taxshieldreferstoareductionintaxescreatedby: a. areductioninsales. b. anincreaseininterestexpense. c. noncashexpenses. d. aproject’sincrementalexpenses. e. opportunitycosts.COST-CUTTINGc 42. Aprojectwhichisdesignedtoimprovethemanufacturingefficiencyofafirmbutwill generatenoadditionalsalesisreferredtoasa(n)_____project. a. sunkcost b. opportunity c. cost-cutting d. revenue-cutting e. revenue-generatingCOST-CUTTINGa 43. Whichofthefollowingstatementsarecorrectconcerningtheanalysisofacost-cutting projectthatinvolvestheacquisitionoffixedassets I. Thecostsshownontheproformaincomestatementrepresentacashinflow. II. Thedepreciationexpenserelatedtothefixedassetswilllowerthetaxexpense. III. Theprojectoperatingcashflowcanbecomputedassales-taxes+depreciation. IV. Earningsbeforeinterestandtaxesfortheprojectiscomputedasdepreciationplusthe amountofthecostsavings. a. IandIIonly b. IIIandIVonly c. IandIIIonly d. IIandIVonly e. I,II,andIVonlyBIDPRICEb 44. Whichoneofthefollowingstatementsiscorrectconcerningbidprices a. Thecompetitorwhowinsthebidistheonewhosubmitsthehighestbidprice. b. Thewinningbidmaybeatapricethatisbelowbreak-evenespeciallyifthereisa relatedaftermarketfortheproduct. c. Abidpriceiscomputedbasedon110percentofafirm’snormalrequiredreturn. d. Abidpriceshouldbecomputedbasedsolelyontheoperatingcashflowsofthe proposedproject. e. Abidpriceshouldbecomputedbasedonazeropercentrequiredrateofreturn.EQUIVALENTANNUALCOSTc 45. Toni’sToolsiscomparingmachinestodeterminewhichonetopurchase.The machinessellfordifferingprices,havedifferingoperatingcosts,differingmachine lives,andwillbereplacedwhenwornout.Thesemachinesshouldbecomparedusing: a. netpresentvalueonly. b. bothnetpresentvalueandtheinternalrateofreturn. c. theireffectiveannualcosts. d. thedepreciationtaxshieldapproach. e. thereplacementpartsapproach.

EQUIVALENTANNUALCOSTe 46. Theequivalentannualcostmethodisusefulindetermining: a. theannualoperatingcostofamachineiftheannualmaintenanceisperformedversus whenthemaintenanceisnotperformedasrecommended. b. thetaxshieldbenefitsofdepreciationgiventhepurchaseofnewassetsforaproject. c. operatingcashflowsforcost-cuttingprojectsofequalduration. d. whichoneoftwomachinestoacquiregivenequalmachinelivesbutunequalmachine costs. e. whichoneoftwomachinestopurchasewhenthemachinesaremutuallyexclusive, havedifferentmachinelives,andwillbereplacedoncetheyarewornout.III. PROBLEMSRELEVANTCASHFLOWSd 47. Marshall’s&Co.purchasedacornerlotinEglon $640,000.Thelotwasrecentlyappraisedat$810,000.Atthetimeofthepurchase,the companyspent$50,000togradethelotandanother$4,000tobuildasmallbuilding onthelottohouseaparkinglotattendantwhohasoverseentheuseofthelotfordaily commuterparking.Thecompanynowwantstobuildanewretailstoreonthesite.The buildingcostisestimatedat$million.Whatamountshouldbeusedastheinitial cashflowforthisbuildingproject a. $1,200,000 b. $1,840,000 c. $1,890,000 d. $2,010,000 e. $2,060,000RELEVANTCASHFLOWSe 48. JamestownLtd.currentlyproducesboatsailsandisconsideringexpandingits operationstoincludeawningsforhomesandtraveltrailers.Thecompanyownsland besideitscurrentmanufacturingfacilitythatcouldbeusedfortheexpansion.The companyboughtthislandtenyearsagoatacostof$250,000.Today,thelandis valuedat$425,000.Thegradingandexcavationworknecessarytobuildontheland willcost$15,000.Thecompanycurrentlyhassomeunusedequipmentwhichit currentlyownsvaluedat$60,000.Thisequipmentcouldbeusedforproducing awningsif$5,000isspentforequipmentmodifications.Otherequipmentcosting $780,000willalsoberequired.Whatistheamountoftheinitialcashflowforthis expansionproject a. $800,000 b. $1,050,000 c. $1,110,000 d. $1,225,000 e. $1,285,000

RELEVANTCASHFLOWSb 49. Wilbert’s,Inc.paid$90,000,incash,forapieceofequipmentthreeyearsago.Last year,thecompanyspent$10,000toupdatetheequipmentwiththelatesttechnology. Thecompanynolongerusesthisequipmentintheircurrentoperationsandhas receivedanofferof$50,000fromafirmwhowouldliketopurchaseit.Wilbert’sis debatingwhethertoselltheequipmentortoexpandtheiroperationssuchthatthe equipmentcanbeused.Whenevaluatingtheexpansionoption,whatvalue,ifany, shouldWilbert’sassigntothisequipmentasaninitialcostoftheproject a. $40,000 b. $50,000 c. $60,000 d. $80,000 e. $90,000RELEVANTCASHFLOWSa 50. WalksSoftly,Inc.sellscustomizedshoes.Currently,theysell10,000pairsofshoes annuallyatanaveragepriceof$68apair.Theyareconsideringaddingalower-priced lineofshoeswhichsellfor$49apair.WalksSoftlyestimatestheycansell5,000pairs ofthelower-pricedshoesbutwillsell1,000lesspairsofthehigher-pricedshoesby doingso.Whatistheamountofthesalesthatshouldbeusedwhenevaluatingthe additionofthelower-pricedshoes a. $177,000 b. $245,000 c. $313,000 d. $789,000 e. $857,000OPPORTUNITYCOSTc 51. Yourfirmpurchasedawarehousefor$335,000sixyearsago.Fouryearsago,repairs weremadetothebuildingwhichcost$60,000.Theannualtaxesonthepropertyare $20,000.Thewarehousehasacurrentbookvalueof$268,000andamarketvalueof $295,000.Thewarehouseistotallypaidforandsolelyownedbyyourfirm.Ifthe companydecidestoassignthiswarehousetoanewproject,whatvalue,ifany,should beincludedintheinitialcashflowoftheprojectforthisbuilding a. $0 b. $268,000 c. $295,000 d. $395,000 e. $515,000

OPPORTUNITYCOSTd 52. Youownahousethatyourentfor$1,200amonth.Themaintenanceexpenseson thehouseaverage$200amonth.Thehousecost$89,000whenyoupurchasedit severalyearsago.Arecentappraisalonthehousevalueditat$210,000.Theannual propertytaxesare$5,000.Ifyousellthehouseyouwillincur$20,000inexpenses. Youaredecidingwhethertosellthehouseorconvertitforyourownuseasa professionaloffice.Whatvalueshouldyouplaceonthishousewhenanalyzingthe optionofusingitasaprofessionaloffice a. $89,000 b. $120,000 c. $185,000 d. $190,000 e. $210,000OPPORTUNITYCOSTc 53. BigJoe’sownsamanufacturingfacilitythatiscurrentlysittingidle.Thefacilityis locatedonapieceoflandthatoriginallycost$129,000.Thefacilityitselfcost $650,000tobuild.Asofnow,thebookvalueofthelandandthefacilityare$129,000 and$186,500,respectively.BigJoe’sreceivedanofferof$590,000forthelandand facilitylastweek.Theyrejectedthisoffereventhoughtheyweretoldthatitisa reasonableofferintoday’smarket.IfBigJoe’sweretoconsiderusingthislandand facilityinanewproject,whatcost,ifany,shouldtheyincludeintheprojectanalysis a. $0 b. $315,500 c. $590,000 d. $650,000 e. $779,000EROSIONCOSTb 54. Jamie’sMotorHomeSalescurrentlysells1,000ClassAmotorhomes,2,500ClassC motorhomes,and4,000pop-uptrailerseachyear.Jamieisconsideringaddingamid- rangecamperandexpectsthatifshedoessoshecansell1,500ofthem.However,if thenewcamperisadded,JamieexpectsthatherClassAsaleswilldeclineto950units whiletheClassCcampersdeclineto2,200.Thesalesofpop-upswillnotbeaffected. ClassAmotorhomessellforanaverageof$125,000each.ClassChomesarepriced at$39,500andthepop-upssellfor$5,000each.Thenewmid-rangecamperwillsell for$47,900.Whatistheerosioncost a. $6,250,000 b. $18,100,000 c. $53,750,000 d. $93,150,000 e. $118,789,500

OCFe 55. Ernie’sElectricalisevaluatingaprojectwhichwillincreasesalesby$50,000and costsby$30,000.Theprojectwillcost$150,000andbedepreciatedstraight-linetoa zerobookvalueoverthe10yearlifeoftheproject.Theapplicabletaxrateis34 percent.Whatistheoperatingcashflowforthisproject a. $3,300 b. $5,000 c. $8,300 d. $13,300 e. $18,300OCFd 56. Kurt’sKabinetsislookingataprojectthatwillrequire$80,000infixedassetsand another$20,000innetworkingcapital.Theprojectisexpectedtoproducesalesof $110,000withassociatedcostsof$70,000.Theprojecthasa4-yearlife.Thecompany usesstraight-linedepreciationtoazerobookvalueoverthelifeoftheproject.Thetax rateis35percent.Whatistheoperatingcashflowforthisproject a. $7,000 b. $13,000 c. $27,000 d. $33,000 e. $40,000BOTTOM-UPOCFc 57. Peter’sBoatshassalesof$760,000andaprofitmarginof5percent.Theannual depreciationexpenseis$80,000.Whatistheamountoftheoperatingcashflowifthe companyhasnolong-termdebt a. $34,000 b. $86,400 c. $118,000 d. $120,400 e. $123,900BOTTOM-UPOCFd 58. LePlacehassalesof$439,000,depreciationof$32,000,andnetworkingcapitalof $56,000.Thefirmhasataxrateof34percentandaprofitmarginof6percent.The firmhasnointerestexpense.Whatistheamountoftheoperatingcashflow a. $49,384 b. $52,616 c. $54,980 d. $58,340 e. $114,340

TOP-DOWNOCFb 59. Ben’sBorderCaféisconsideringaprojectwhichwillproducesalesof$16,000and increasecashexpensesby$10,000.Iftheprojectisimplemented,taxeswillincrease from $23,000to$24,500anddepreciationwillincreasefrom$4,000to$5,500.What istheamountoftheoperatingcashflowusingthetop-downapproach a. $4,000 b. $4,500 c. $6,000 d. $7,500 e. $8,500TOP-DOWNOCFc 60. Ronnie’sCoffeeHouseisconsideringaprojectwhichwillproducesalesof$6,000 andincreasecashexpensesby$2,500.Iftheprojectisimplemented,taxeswill increaseby$1,300.Theadditionaldepreciationexpensewillbe$1,000.Aninitialcash outlayof$2,000isrequiredfornetworkingcapital.Whatistheamountofthe operatingcashflowusingthetop-downapproach a. $200 b. $1,500 c. $2,200 d. $3,500 e. $4,200TAXSHIELDOCFc 61. Aprojectwillincreasesalesby$60,000andcashexpensesby$51,000.Theproject willcost$40,000andbedepreciatedusingstraight-linedepreciationtoazerobook valueoverthe4-yearlifeoftheproject.Thecompanyhasamarginaltaxrateof35 percent.Whatistheoperatingcashflowoftheprojectusingthetaxshieldapproach a. $5,850 b. $8,650 c. $9,350 d. $9,700 e. $10,350DEPRECIATIONTAXSHIELDa 62. Aprojectwillincreasesalesby$140,000andcashexpensesby$95,000.Theproject willcost$100,000andbedepreciatedusingthestraight-linemethodtoazerobook valueoverthe4-yearlifeoftheproject.Thecompanyhasamarginaltaxrateof34 percent.Whatisthevalueofthedepreciationtaxshield a. $8,500 b. $17,000 c. $22,500 d. $25,000 e. $37,750

MACRSDEPRECIATIONd 63. SunLee’sFurniturejustpurchasedsomefixedassetsclassifiedas5-yearpropertyfor MACRS.Theassetscost$24,000.Whatistheamountofthedepreciationexpensefor thethirdyear MACRS5-yearproperty Year Rate 1 % 2 % 3 % 4 % 5 % 6 % a. $2,304 b. $2,507 c. $2,765 d. $4,608 e. $4,800MACRSDEPRECIATIONa 64. Youjustpurchasedsomeequipmentthatisclassifiedas5-yearpropertyforMACRS. Theequipmentcost$67,600.Whatwillthebookvalueofthisequipmentbeattheend ofthreeyearsshouldyoudecidetoreselltheequipmentatthatpointintime MACRS5-yearproperty Year Rate 1 % 2 % 3 % 4 % 5 % 6 % a. $19, b. $20, c. $27, d. $48, e. $48,

MACRSDEPRECIATIONd 65. LiCheng’sEnterprisesjustpurchasedsomefixedassetsthatareclassifiedas3-year propertyforMACRS.Theassetscost$1,900.Whatistheamountofthe