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Managerial accounting

1-A project's net present value, ignoring income taxes, is affected by:

a- the net book value of an asset that is replaced.

b- the depreciation on an asset that is replaced.

c- the depreciation to be taken on assets used directly on the project.

d- proceeds from the sale of an asset that is replaced.

2-A company has unlimited funds to invest at its discount rate. The company should invest in all projects having:

a- an internal rate of return greater than zero.
b- a net present value greater than zero.
c- a simple rate of return greater than the discount rate.
d- a payback period less than the project's estimated life.

3-When the cash flows are the same every period after the initial investment in a project, the payback period is equal to:

a- the net present value.
b- the simple rate of return.
c- the factor of the internal rate of return.
d- the payback rate of return.

4-The project profitability index and the internal rate of return:

a- will always result in the same preference ranking for investment projects.
b- will sometimes result in different preference rankings for investment projects.
c- are less dependable than the payback method in ranking investment projects.
d- are less dependable than net present value in ranking investment projects

5-A preference decision:

a- is concerned with whether a project clears the minimum required rate of return hurdle.
b- comes before the screening decision.
c- is concerned with determining which of several acceptable alternatives is best.
d- All of the above

6-When evaluating a project, the portion of the fixed corporate headquarters expense that would be allocated to the project should be:

a- included as a cash outflow on an after-tax basis by multiplying the expense by one minus the tax rate.
b- included as a cash outflow on an after-tax basis by multiplying the expense by the tax rate.
c- included as a cash outflow on a before-tax basis.
d- ignored.

Solution Preview

Please eee the attached file.

1-A project's net present value, ignoring income taxes, is affected by:

a- the net book value of an asset that is replaced.

b- the depreciation on an asset that is replaced.

c- the depreciation to be taken on assets used directly on the project.

d- proceeds from the sale of an asset that is replaced.

2-A company has unlimited funds to invest at its discount rate. The company should invest in all projects having:

a- an internal rate of return greater ...

Solution Summary

This solution is comprised of a detailed explanation to answer what a project's net present value, ignoring income taxes, is affected by.

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