1. If a firm is projected to increase revenues by 10% AND net income by the same amount, which of the following must be true?
A- there can be no variable costs
B- there can be no fixed costs
C- there can be no taxes
2. The interest rate typically will be the highest on which of the following
Limited liability bond
General obligation bond
Revenue bond
Corporate bond
3. You are the Chief Financial Officer of a large electric utility company, and are about to recommend to your Board of Directors that an expensive new wind electric generating plant is approved for construction. The Board represents the company's shareholders: As such, any decisions they make must be done in the shareholders' best interest.
What part of your assessment gives you confidence that this project will benefit the company’s shareholders in future periods?
a. The Net Present Value (“NPV”) of the project was below zero.
b. The Internal Rate of Return (“IRR”) of the project was greater than the targeted ‘hurdle’ rate of return.
c. The project has expected future cash flows that are extremely difficult to forecast with any accuracy.
d. The salvage value of the equipment required for the project at the end of its useful life is anticipated to be just 5% of its original cost.
e. All of the above.