28. The Budgeting and Cash Managershould invest the idle cash (excess funds) in
ID: 2457995 • Letter: 2
Question
28. The Budgeting and Cash Managershould invest the idle cash (excess funds) in the followingsecurities in order to earn a return:
(a) Treasury bond security.
(b) Stock options.
(c) Treasury bills or commercial paper securities.
(d) Individual Retirement Accounts.
29. The screening decisions incapital budgeting can be illustrated as:
(a) Earning the internal rate of return the Chief Budgeting Officerwants.
(b) Looking for a return above a certain percentage.
(c) Earning a positive net present value.
(d) Making sure that the payback has the shortest period.
30. Sarah’s computer City sells 5,000 boxes ofCD-RW compact discs per year. She determined that she pays$50 to process an order for discs. Her purchase price is $6for each box of discs and she has determined that storage costs forone year are 25 percent of the purchase price. What is herapproximate total ordering cost?
(a) $865.
(b) $611.
(c) $433.
(d) $87.
(e) $43.
31. With non-mutually exclusiveprojects:
(a) The payback method will select the best project.
(b) The net present value method will always select the bestproject.
(c) The internal rate of return method will always select the bestproject.
(d) The net present value and the internal rate of return will alwaysaccept or reject the same project.
32. The first step in the capitalbudgeting process is:
(a) Collection of data.
(b) Idea development.
(c) Assign probabilities.
(d) Determine cash flow.
Explanation / Answer
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