30. Which of the following is true? A) The form, content, and frequency of varia

Question

30. Which of the following is true?
A) The form, content, and frequency of variance reports vary considerably among companies.
B) The form, content, and frequency of variance reports do not vary among companies.
C) The form and content of variance reports vary considerably among companies, but the frequency is always weekly.
D) The form and content of variance reports are consistent among companies, but the frequency varies.

31. The annual rate of return is computed by dividing expected annual
A) cash inflows by average investment.
B) net income by average investment.
C) cash inflows by original investment.
D) net income by original investment.

32. Intangible benefits in capital budgeting would include all of the following except increased
A) product quality.
B) employee loyalty.
C) salvage value.
D) product safety.

33. The higher the risk element in a project, the
A) more attractive the investment.
B) higher the net present value.
C) higher the cost of capital.
D) higher the discount rate.

34. If a project has a profitability index of 1.20, then the project's internal rate of return is
A) equal to the discount rate.
B) less than the discount rate.
C) greater than the discount rate.
D) equal to 20%.

35. If the internal rate of return exceeds the discount rate, then the net present value of a project is
A) positive.
B) negative.
C) zero.
D) one.

Explanation / Answer

30) D The analysis is the same, but delivery depends on when managers want the info' 31) B 32) C Salvage value is determinable, so tangible 33) D Higher risk, means higher rates of return, so discount factors are larger to account for this 34) B If earns better than IR, then PI >1 , and so is a good investment 35) B

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