MINDTAP Assignment 12-Cash Flow Estimation and Risk Analysis Due on Nov 6 at 11
ID: 2780799 • Letter: M
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MINDTAP Assignment 12-Cash Flow Estimation and Risk Analysis Due on Nov 6 at 11 PM EST Back to Assignment Attempts: 9. Capital budgeting and the post-audit process Keep the Highest: 4 AaAa Cramer Designs produces a wide range of women's apparel. Three years ago, the company spent $1.2 million to launch its line of designer handbags. Brittany Cramer, the company's CEO and founder, is conducting a post-audit on the handbag line to determine how the division's performance compared to the company's expectations. She has found that the revenue from the handbag division was much lower than expected; however, the company was able to produce the handbags for a much lower cost per unit than expected. Which of the following should be considered the main purpose(s) of the post-audit? Check all that apply. It helps project the firm's tax liability It encourages managers to generate reasonable forecasts. It helps improve operations. When a firm a exhausts its retained earnings and must raise capital from external sources, its welghted average cost of capital (WACC) wi nner w2N 27.0,0.1 3.34 :©2004-2016 Apli. Ail nghts reserved. 13 Cenpege Learning except as noted All rights reserved Save & Continge Continue without saving C/at/servle/quiziquiz action takeQuizquiz probGuid QNAPCOA8010100000039d Type here to searchExplanation / Answer
Cramer Designs which of the following should be considered the main purpose{s) of the post-audit? It helps project the firm's tax liability Consequently, it will not help project the rm's tax liability, because the rm already knows its tax liability for those years. It encourages managers to generate reasonable forecasts. The two main purposa of the post-audit pro-Ins are to help the rm improve its forecasts and its operations. When managers are forced to compare their actual results with their initial forecasts, they are less likely to make make nancial forecasts that are unattainable in reality. It helps improve operations The post-audit pron-s can help improve operations, because, if costs are above or sales are below predicted levels, managers will strive to improve operations to bring their results in line with their forecasts. The post-audit is used to evaluate the results of a project. when a firm a exhausts its retained earnings and must raise capital from external sources, its weighted average cost of capital (WACC) will INCREASE The cost of equity from retained earnings is lower than the cost of extemal equity. when a rm raises equity capital from extemal sources, its WACC will rise.
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