II. The net present value is equal to zero at the accounting break-even point. III. The quantity sold at the accounting break-even point is equal to the total fixed costs plus depreciation divided by the contribution margin. IV. The quantity sold at the accounting break-even point is equal to the total fixed costs divided by the contribution margin. a. I and III only b. I and IV only c. II and III only d. II and IV only e. I, II, and IV only Difficulty level: Medium
ACCOUNTING BREAK-EVEN
b 22. All else constant, the accounting break-even level of sales will decrease when the: a. fixed costs increase. b. depreciation expense decreases. c. contribution margin decreases. d. variable costs per unit increase. e. selling price per unit decreases. Difficulty level: Medium
PRESENT VALUE BREAK-EVEN
d 23. The point where a project produces a rate of return equal to the required return is known as the: a. point of zero operating leverage. b. internal break-even point. c. accounting break-even point. d. present value break-even point. e. internal break-even point. Difficulty level: Easy
PRESENT VALUE BREAK-EVEN
b 24. Which of the following statements are correct concerning the present value break-even point of a project? I. The present value of the cash inflows equals the amount of the initial investment. II. The payback period of the project is equal to the life of the project. III. The operating cash flow is at a level that produces a net present value of zero. IV. The project never pays back on a discounted basis. a. I and II only b. I and III only c. II and IV only d. III and IV only e. I, III, and IV only Difficulty level: Medium
INVESTMENT TIMING DECISION
b 25. The investment timing decision relates to: a. how long the cash flows last once a project is implemented. b. the decision as to when a project should be started. c. how frequently the cash flows of a project occur. d. how frequently the interest on the debt incurred to finance a project is compounded. e. the decision to either finance a project over time or pay out the initial cost in cash. Difficulty level: Medium
OPTION TO WAIT
e 26. The timing option that gives the option to wait: I. may be of minimal value if the project relates to a rapidly changing technology. II. is partially dependent upon the discount rate applied to the project being evaluated. III. is defined as the situation where operations are shut down for a period of time. IV. has a value equal to the net present value of the project if it is started today versus the net present value if it is started at some later date. a. I and III only b. II and IV only c. I and II only d. II, III, and IV only e. I, II, and IV only Difficulty level: Challenge
OPTION TO EXPAND
b 27. Last month you introduced a new product to the market. Consumer demand has been overwhelming and appears that strong demand will exist over the long-term. Given this situation, management should consider the option to: a. suspend. b. expand. c. abandon. d. contract. e. withdraw. Difficulty level: Easy
OPTION TO EXPAND
c 28. Including the option to expand in your project analysis will tend to: a. extend the duration of a project but not affect the project’s net present value. b. increase the cash flows of a project but decrease the project’s net present value. c. increase the net present value of a project. d. decrease the net present value of a project. e. have no effect on either a project’s cash flows or its net present value. Difficulty level: Medium
SENSITIVITY AND SENARIO ANALYSIS
d 29. Theoretically, the NPV is the most appropriate method to determine the acceptability
of a project. A false sense of security can be overwhelm the decision-maker when the procedure is applied properly and the positive NPV results are accepted blindly. Sensitivity and scenario analysis aid in the process by
a. changing the underlying assumptions on which the decision is based. b. highlights the areas where more and better data are needed. c. providing a picture of how an event can affect the calculations. d. All of the above. e. None of the above.
Difficulty level: Medium
DECSION TREE
a 30. In order to make a decision with a decision tree a. one starts farthest out in time to make the first decision. b. one must begin at time 0. c. any path can be taken to get to the end. d. any path can be taken to get back to the beginning. e. None of the above. Difficulty level: Medium
DECISION TREE
c 31. In a decision tree, the NPV to make the yes/no decision is dependent on a. only the cash flows from successful path. b. on the path where the probabilities add up to one. c. all cash flows and probabilities. d. only the cash flows and probabilities of the successful path. e. None of the above. Difficulty level: Medium
DECISION TREE
e 32. In a decision tree, caution should be used in analysis because a. early stage decisions are probably riskier and should not likely use the same discount
rate.
b. if a negative NPV is actually occurring, management should opt out of the project and
minimize their loss.
c. decision trees are only used for planning, not actually daily management. d. Both A and C. e. Both A and B. Difficulty level: Medium
SENSITIVITY ANALYSIS
d 33. Sensitivity analysis evaluates the NPV with respect to a. changes in the underlying assumptions. b. one variable changing while holding the others constant. c. different economic conditions. d. All of the above. e. None of the above. Difficulty level: Medium
SENSITIVITY ANALYSIS
d 34. Sensitivity analysis provides information on a. whether the NPV should be trusted, it may provide a false sense of security if all
NPVs are positive.
b. the need for additional information as it tests each variable in isolation. c. the degree of difficulty in changing multiple variables together. d. Both A and B. e. Both A and C. Difficulty level: Medium
FIXED COSTS
b 35. Fixed production costs are a. directly related to labor costs. b. measured as cost per unit of time. c. measured as cost per unit of output. d. dependent on the amount of goods or services produced. e. None of the above. Difficulty level: Medium
VARIABLE COSTS d 36. Variable costs a. change as the quantity of output changes. b. are zero when production is zero. c. are exemplified by direct labor and raw materials. d. All of the above. e. None of the above. Difficulty level: Easy
SENSITIVITY ANALYSIS
b 37. An investigation of the degree to which NPV depends on assumptions made about any
singular critical variable is called a(n)
a. operating analysis. b. sensitivity analysis. c. marginal benefit analysis.
d. decision tree analysis. e. None of the above. Difficulty level: Easy
SENSITIVITY AND SCENARIOS ANALYSIS
b 38. Scenario analysis is different than sensitivity analysis a. as no economic forecasts are changed. b. as several variables are changed together. c. because scenario analysis deals with actual data versus sensitivity analysis which deals
with a forecast.
d. because it is short and simple. e. because it is 'by the seat of the pants' technique. Difficulty level: Medium
EQUIVALENT ANNUAL COST
c 39. In the present-value break-even the EAC is used to a. determine the opportunity cost of investment. b. allocate depreciation over the life of the project. c. allocate the initial investment at its opportunity cost over the life of the project. d. determine the contribution margin to fixed costs. e. None of the above. Difficulty level: Medium
BREAK-EVEN
b 40. The present value break-even point is superior to the accounting break-even point
because
a. present value break-even is more complicated to calculate. b. present value break-even covers the economic opportunity costs of the investment. c. present value break-even is the same as sensitivity analysis. d. present value break-even covers the fixed costs of production, which the accounting
break-even does not.
e. present value break-even covers the variable costs of production, which the accounting
break-even does not.
Difficulty level: Easy
ABANDONMENT
d 41. The potential decision to abandon a project has option value because a. abandonment can occur at any future point in time. b. a project may be worth more dead than alive. c. management is not locked into a negative outcome. d. All of the above. e. None of the above.
罗斯-公司理财-英文练习题-附带答案-第九章
