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Capital budgeting task, Book values, APR, EAR

31. Which of the these activities is a capital budgeting task?
determining the amount of cash needed on a daily basis to operate a firm
. identifying assets that produce value in excess of the cost to acquire those assets
establishing the inventory level
establishing a new credit policy

32. Book values are different from market values because:
Book values reflect the value of the asset based on generally-accepted accounting principles.
Book values are used in the company's balance sheet.
Book values do not reflect the amount someone is willing to pay today for an asset.
All of the above
None of the above

34. Regional Bank offers you an APR of 19 percent compounded semiannually, and Local Bank offers you an EAR of 19.50 percent for a new automobile loan. You should choose ______________ because its _______ is lower.
Regional Bank, APR
Local Bank, EAR
Regional Bank, EAR
Local Bank, APR

35. You deposited $8,000 in your bank account today. Which of the following will increase the future value of your deposit, assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all that apply:
a decrease in the interest rate
increasing the initial amount of your deposit
decreasing the frequency of the interest payments
extending the length of the investment period

36. You want to have $15,000 for a down payment on a house five years from now. If you can earn 13 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal?
$7,858.11
$8,141.40
$9,803.58
$12,464.28
$14,213.25

Solution Preview

31. Which of the these activities is a capital budgeting task?

. identifying assets that produce value in excess of the cost to acquire those assets
(As its a long term decision)

32. Book values are different from market values because:

All of the above

34. Regional Bank offers ...

Solution Summary

Response discusses Capital budgeting task, Book values, APR, EAR, Value of deposit

$2.19