Question 1 When a U.S. firm uses accelerated depreciation for tax purposes and straight-line depreciation for financial reporting: Question 2 When evaluating a firm with excess capacity, which of the following statements is false? Question 3 If you discounted a set of positive real cash flows with a nominal discount rate and inflation were positive, you would __________ the present value of those cash flows. Question 4 All of the following are incremental costs of commuting to college in your hometown except: Question 5 Which of the following should not be included as a cash flow in evaluating a new piece of equipment for manufacturing? Question 6 The acronym MACRS stands for: Question 7 If inflation is positive, discounting positive nominal cash flows with a real discount rate will lead to Question 8 A(n) __________ in working capital represents a(n) __________. Question 9 When analyzing capital budgeting projects, it is important to consider __________ and make sure that the project, in addition to having a positive NPV, makes sense. Question 10 Analysts should measure all cash flows of a project on a/an __________ basis. Question 11 Looking at all three different approaches for estimating the expected market risk premium, the consensus is that Question 12 Two firms have the same asset beta but different equity betas. The direct cause is likely: Question 13 Sensitivity analysis: Question 14 Requiring that all projects with risk comparable to that of the firm as a whole earn at least the __________ means that firms will only invest in projects that have positive NPVs. Question 15 Which of the following is not a competitive advantage for a firm? Question 16 If the firm applies its WACC to all projects, it will tend to accept some negative-NPV projects that are Question 17 A real estate developer considers buying land that currently has substantial pine trees (pine trees are a desired timber). The development will not occur for several years and is somewhat flexible, but when it does, the pine trees will be harvested. The developer determines that the price uncertainty of the timber will increase over the next few years (future prices are expected to be very volatile). Does this increase or decrease the value of the land to the developer? Question 18 Generally, you would expect the beta of debt for a firm to be Question 19 Which of the following is true for a large diversified conglomerate? Question 20 Which of the following would explain a positive NPV calculation?
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