FI 360 FINAL EXAM(VERSION 2), COMPLETE WITH QUESTIONS AND ANSWERS. LATEST UPDATE.Question 1
6.5 / 6.5 pts
An important consideration in the lease versus purchase decision is
the loss of the depreciation tax shield if
...
FI 360 FINAL EXAM(VERSION 2), COMPLETE WITH QUESTIONS AND ANSWERS. LATEST UPDATE.Question 1
6.5 / 6.5 pts
An important consideration in the lease versus purchase decision is
the loss of the depreciation tax shield if leased.
the benefit of the lease payment as a tax deduction.
the effect on financial structure and future funding needs.
all of the above.
Question 2
6.5 / 6.5 pts
Net working capital decreases when
inventory falls, accounts receivable falls, or accounts payable increases
inventory increases, accounts receivable increases, or accounts payable falls
cost of goods sold falls, or interest rate falls
operating expenses fall, or current assets increase
Question 3
6.5 / 6.5 pts
Bavarian Brew, an unlevered firm, has an expected EBIT of $500,000. The required return on
assets for the firm’s assets is 10%. The company has 250,000 shares outstanding. The company
is considering raising $1 million in debt with a required return of 6% and would use the proceeds
to repurchase outstanding stock. What is the value of Bavarian Brew before restructuring?
Assume no corporate taxes.
$500,000
$5,000,000
$1,000,000
$3,300,000
Question 4
6.5 / 6.5 pts
Choclattes Corp. earned $5.00 per share in 2006, and paid a dividend of $2.00 per share. If it
earns $5.50 in 2007 and follows a constant nominal payout policy, its dividend will be
$3.30
$3.00
$2.20
$2.00
Question 5
6.5 / 6.5 pts
Capital budgeting must be placed on an incremental basis. This means that ____ must be
ignored and ____ must be considered.
sunk cost; opportunity cost
sunk cost; financing cost
cannibalization; opportunity cost
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