25. Project which is started by firm for increasing sales is classified as A. new expansion project B. old expanded project C. firm borrowing project D. product line selection
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- According to Richard & Green law, acquiring inputs with long term benefits is called: a. Working Capital management b. Capital Budgeting c. Net Present Value d. Payback periodCalculating return on Investment for an Investment center is defined by the following formula: Multiple Cholce Income/Average invested assets. Contribution margin/Average invested assets. Contribution margin/Ending assets. Net income/Ending assets. Gross profit/Ending assets.Payback period in investment: Objectives, Advantages and Disadvantages
- Based on the profit maximization goal, the financial manager would choose Asset D. Asset B. Asset A. Asset C.The average accounting rate of return (AAR): Select one: A. is the best method of financially analysing mutually exclusive projects. B. is similar to the return on assets ratio. C. measures net income as a percentage of the sales generated by a project. D. considers the time value of money. E. is the primary methodology used in analyzing independent projects.An ERM is: A. Economic capital B. Enterprise stress-testing C. An attempt to take risk into more consideration than in the past D. A technology resource management silo
- What methods are used to conduct a new system's cost-benefit analysis?i. Net prevent value;ii. Return on investment;iii. Breakeven analysis;iv. User feedback and recommendations a. All are correct b. i, ii and iii c. i, ii and iv d. ii, iii and iv.Define each of the following terms: f. Full capacity sales; target fixed assets to sales ratio; required level offixed assetsEnsure to show Excel formulas for work i. Using an example, briefly explain to Mr. Dates what is meant by mutually exclusiveinvestments.ii. Compute each investment’s payback period.iii. Compute each investment’s Net Present Value (NPV).
- A responsibility center structure that considers investments made by the operating segments by using a common cost of capital percentage is called_______. A. return on investment B. residual income C. a profit center D. a discretionary cost centerThe cost of capital represents a. the capital outlay required in a project. b. the initial investment of a project. c. the IRR of the investment. d. the minimum ROI of the investment.Comparing Investment Criteria. Define each of the following investment rules and discuss any potential shortcomings of each. In your definition, state the criterion for accepting or rejecting independent projects under each rule. a. Payback period. b. Internal rate of return. c. Profitability index. d. Net present value.