finance for decision making plz give me some reasons, not just A,B,C,D. thanks a
ID: 2630746 • Letter: F
Question
finance for decision making
plz give me some reasons, not just A,B,C,D. thanks a million!
Extending the credit period granted, with all other components of the credit policy remaining uncharged, likely cause: A decrease in bad debts A decrease in debtors A decrease in sales None of the above A firm uses the extended economic order quantity approach to inventory management. Which one of the following inventory levels is considered to be the minimum inventory level given this approach? 50 per cent of the reorder quantity Safety stock plus the reorder quantity Safety stock level Reorder point level zero inventory The tax treatment regarding the sale of existing assets that are sold far their book value results in: Recovered depreciation taxed as ordinary income. No tax benefit for liability. An ordinary ax benefit A capital gain tax liability and recovered depreciation taxed as ordinary income. None of the above Which of the following is incorrect, regarding the beta? Beta for market portfolio is lee than one Assets with beta less than one are said to have lower systematic risk The risk premium will increase if the beta for the asset increases Beta is a measure of total risk Both A and D As randomly selected securities are combined to create a portfolio, the risk of the portfolio decreases until 10 to 20 securities are included, the portion of the risk eliminated is risk, while that remaining is risk. Total; non-diversifiable; diversifiable Total; diversifiable; non-diversifiable Diversifiable; non-diversifiable; total Relevant; irrelevant; total A corporation is evaluating the relevant cash flows for a capital budgeting decision and must estimate the terminal cash flow. The proposed machine will be disposed at the end of its usable life of five years at an estimated sale price of $2 000. The machine has an original purchase price of $80 000, installation cost of $20 000, and will be depreciated under the prime cost (straight line) method over a five year life. Net working capital is expected to decline by $5 000. The firm has a 40 per cent tax rate on ordinary income and long term capital gains. The terminal cash flow is: $7 000 $6 200 $3 000. $1 200 $2 000Explanation / Answer
7 The Answer would be none of the above as increasing the credit period will allow the debtors more time to pay and thereby would lead to increase in debtors and sales,In addition it would also increase the chances of bad debts as usually the trend.
10 reorder point safety stock as after this if the reorder is not made there can be a chance of stock out
15 none of the above
27 Beta is a measure of Total risk and market Beta is always 1
28 Total,Diversifiable,Non Diversifiable
As total risk decreases in the larger portfolio due to decrease in Diversifiable risk while non diversifiable risk is not reduced
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