Take Assessment: Exam 3 Top of Form Name Exam 3 Instructions Multiple Attempts This Test allows 2 attempts. This is attempt number 1. Force Completion This Test can be saved and resumed later. Question Completion Status: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100   Question 1 1 points Save The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred to as leverage. solvency. yield. quick assets.   Question 2 1 points Save The independent auditor's report does which of the following? Describes which financial statements are covered by the audit Gives the auditor's opinion regarding the fairness of the financial statements Summarizes what the auditor did States that the financial statements are truthful   Question 3 1 points Save The relationship of 120 to 100 can be expressed as 1.2, 1.2:1, or 120%. True False   Question 4 1 points Save The terms acid-test ratio and quick ratio refer to the same ratio--the instant debt-paying ability of a company. True False   Question 5 1 points Save The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as vertical analysis. True False   Question 6 1 points Save The relationship of each asset item as a percent of total assets is an example of horizontal analysis. True False   Question 7 1 points Save A balance sheet shows cash, $75,000; marketable securities, $110,000; receivables, $90,000; and $225,000 of inventories. Current liabilities are $200,000. The current ratio is 1.375 to 1. True False   Question 8 1 points Save What type of analysis is indicated by the following? Increase (Decrease*) 2011 2010 Amount Percent Current assets $  380,000  $  500,000   $(120,000*) (24%)*  Fixed assets 1,680,000       1,500,000 180,000   12%    Vertical analysis Horizontal analysis Liquidity analysis Common-size analysis   Question 9 1 points Save Current position analysis indicates a company's ability to liquidate current liabilities. True False   Question 10 1 points Save Which of the following is NOT included in the computation of the quick ratio? Inventory Marketable securities Accounts receivable Cash   Question 11 1 points Save Based on the following data for the current year, what is the number of days' sales in inventory (rounded to the nearest whole day)? Net sales on account during year $1,204,000 Cost of merchandise sold during year 630,000 Accounts receivable, beginning of ...

1. Take Assessment: Exam 3
Top of Form
Name
Exam 3
Instructions
Multiple Attempts
This Test allows 2 attempts. This is attempt number 1.
Force Completion
This Test can be saved and resumed later.
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5. Question 1
1 points
Save
The tendency of the rate earned on stockholders' equity to vary
disproportionately from the rate earned on total assets is
sometimes referred to as
leverage.
solvency.
yield.
quick assets.
Question 2
1 points
Save
The independent auditor's report does which of the following?

6. Describes which financial statements are covered by the audit
Gives the auditor's opinion regarding the fairness of the
financial statements
Summarizes what the auditor did
States that the financial statements are truthful
Question 3
1 points
Save
The relationship of 120 to 100 can be expressed as 1.2, 1.2:1, or
120%.

7. True
False
Question 4
1 points
Save
The terms acid-test ratio and quick ratio refer to the same ratio-
-the instant debt-paying ability of a company.
True
False
Question 5
1 points
Save

8. The percentage analysis of increases and decreases in
corresponding items in comparative financial statements is
referred to as vertical analysis.
True
False
Question 6
1 points
Save
The relationship of each asset item as a percent of total assets is
an example of horizontal analysis.
True
False

9. Question 7
1 points
Save
A balance sheet shows cash, $75,000; marketable securities,
$110,000; receivables, $90,000; and $225,000 of inventories.
Current liabilities are $200,000. The current ratio is 1.375 to 1.
True
False
Question 8
1 points
Save
What type of analysis is indicated by the following?

10. Increase (Decrease*)
2011
2010
Amount
Percent
Current assets
$ 380,000
$ 500,000
$(120,000*)
(24%)*
Fixed assets
1,680,000
1,500,000
180,000
12%
Vertical analysis
Horizontal analysis

11. Liquidity analysis
Common-size analysis
Question 9
1 points
Save
Current position analysis indicates a company's ability to
liquidate current liabilities.
True
False
Question 10
1 points
Save

12. Which of the following is NOT included in the computation of
the quick ratio?
Inventory
Marketable securities
Accounts receivable
Cash
Question 11
1 points
Save
Based on the following data for the current year, what is the
number of days' sales in inventory (rounded to the nearest
whole day)?
Net sales on account during year
$1,204,000

13. Cost of merchandise sold during year
630,000
Accounts receivable, beginning of year
75,000
Accounts receivable, end of year
85,000
Inventory, beginning of year
81,600
Inventory, end of year
98,600
58
48
53
30

14. Question 12
1 points
Save
Based on the following data for the current year, what is the
inventory turnover?
Net sales on account during year
$ 500,000
Cost of merchandise sold during year
300,000
Accounts receivable, beginning of year
45,000
Accounts receivable, end of year
35,000
Inventory, beginning of year
90,000
Inventory, end of year
110,000
3.0
2.7

15. 4.0
3.3
Question 13
1 points
Save
Thomson Company reported the following on its income
statement:
Income before income taxes
$420,000
Income tax expense
120,000
Net income
$300,000
An analysis of the income statement revealed that interest
expense was $40,000. Thomson Company's number of times
interest charges are earned was

16. 8 times.
7.5 times.
9.5 times.
11.5 times.
Question 14
1 points
Save
The rate earned on total assets is one of the measures of
profitability.
True
False

17. Question 15
1 points
Save
Solvency analysis focuses on the ability of a business to make a
profit.
True
False
Question 16
1 points
Save
An increase in the ratio of stockholders' equity to liabilities
indicates an improvement in the margin of safety for creditors.

18. True
False
Question 17
1 points
Save
Based on the following data for the current year, what is the
inventory turnover?
Net sales on account during year
$ 517,500
Cost of merchandise sold during year
450,000
Accounts receivable, beginning of year
50,000
Accounts receivable, end of year
40,000
Inventory, beginning of year
110,000
Inventory, end of year
140,000

19. 7.2
3.6
3.2
4.2
Question 18
1 points
Save
Which of the following is NOT an analysis used in assessing
solvency?

20. Inventory analysis
Number of times interest charges are earned
Asset turnover
Accounts receivable analysis
Question 19
1 points
Save
The effects of differences in accounting methods are of little
importance when analyzing comparable data from competing
businesses.
True
False

21. Question 20
1 points
Save
Based on the following data, what is the quick ratio, rounded to
one decimal place?
Accounts payable
$ 32,000
Accounts receivable
64,000
Accrued liabilities
7,000
Cash
20,000
Intangible assets
40,000
Inventory
72,000
Long-term investments
100,000
Long-term liabilities
75,000
Marketable securities
35,000
Notes payable (short-term)
25,000
Property, plant, and equipment
625,000
Prepaid expenses
2,000

22. 3.2
2.1
1.9
1.4
Question 21
1 points
Save
Balance sheet and income statement data indicate the following:
Bonds payable, 12% (issued 1998, due 2022)
$1,000,000
Preferred 5% stock, $100 par (no change during year)
300,000
Common stock, $50 par (no change during year)
2,000,000

23. Income before income tax for year
300,000
Income tax for year
80,000
Common dividends paid
50,000
Preferred dividends paid
15,000
Based on the data presented above, what is the number of times
interest charges were earned (rounded to one decimal place)?
3.5
2.2
4.0
The answer cannot be determined.

24. Question 22
1 points
Save
If a firm has an quick ratio of 1, the subsequent payment of an
account payable will cause the ratio to increase.
True
False
Question 23
1 points
Save
Profitability refers to the ability of the business to

25. earn a reasonable amount of income.
provide owners with dividends.
pay its current and noncurrent liabilities.
manage its accounts receivable and inventory.
Question 24
1 points
Save
For most profitable companies, the rate earned on total assets
will be less than
the rate earned on stockholders’ equity.
the rate earned on total liabilities and stockholders' equity.

26. the rate earned on sales.
cannot be determined without more information.
Question 25
1 points
Save
Statements in which all items are expressed in relative terms are
called common-size statements.
True
False
Question 26
1 points
Save

27. The purpose of an audit is to
determine whether or not a company is a good investment.
render an opinion on the fairness of the statements.
determine whether or not a company complies with income tax
regulations.
determine whether or not a company is a good credit risk.
Question 27
1 points
Save
The number of times interest charges are earned is computed as

28. net income plus interest charges, divided by interest charges.
income before income tax plus interest charges, divided by
interest charges.
net income divided by interest charges.
income before income tax divided by interest charges.
Question 28
1 points
Save
“Working capital” is another term for the current ratio.
True
False

29. Question 29
1 points
Save
The percent of fixed assets to total assets is an example of
vertical analysis.
solvency analysis.
profitability analysis.
horizontal analysis.
Question 30
1 points

30. Save
If the accounts receivable turnover for the current year has
decreased when compared with the ratio for the preceding year,
there has been an acceleration in the collection of receivables.
True
False
Question 31
1 points
Save
An acceleration in the collection of receivables will tend to
cause the accounts receivable turnover to
decrease.

31. remain the same.
either increase or decrease.
increase.
Question 32
1 points
Save
The percentage analysis of increases and decreases in
corresponding items in comparative financial statements is
referred to as horizontal analysis.
True
False

32. Question 33
1 points
Save
The comparison of the financial data of a single company for
two or more years is called horizontal analysis.
True
False
Question 34
1 points
Save
Which of the following conditions would cause the break-even
point to decrease?

33. Total fixed costs increase
Unit selling price decreases
Unit variable cost decreases
Unit variable cost increases
Question 35
1 points
Save
Assume that Crowson Co. sold 8,000 units of Product A and
2,000 units of Product B during the past year. The unit
contribution margins for Products A and B are $20 and $45,
respectively. Crowson has fixed costs of $350,000. The break-
even point in units is
14,000 units.

34. 25,278 units.
8,000 units.
10,769 units.
Question 36
1 points
Save
Snower Corporation sells product G for $150 per unit, the
variable cost per unit is $105, the fixed costs are $720,000, and
Snower is in the 25% corporate tax bracket. What are the sales
(in dollars) required to earn a net income (after tax) of $40,000?
$2,577,778
$2,533,350

35. $2,566,667
$2,400,000
Question 37
1 points
Save
If the contribution margin ratio for Harrison Company is 38%,
sales were $425,000. and fixed costs were $100,000, what was
the income from operations?
$163,500
$161,500
$54,730
$61,500

36. Question 38
1 points
Save
If sales total $2,000,000, fixed costs total $800,000, and
variable costs are 60% of sales, the contribution margin ratio is
40%.
True
False
Question 39
1 points
Save
If variable costs per unit increased because of an increase in
hourly wage rates, the break-even point would

37. decrease.
increase.
remain the same.
increase or decrease, depending upon the percentage increase in
wage rates.
Question 40
1 points
Save
Cost-volume-profit analysis CANNOT be used if which of the
following occurs?

38. Costs cannot be properly classified into fixed and variable costs
The total fixed costs change
The per-unit variable costs change
Per-unit sales prices change
Question 41
1 points
Save
If fixed costs are $220,000 and the unit contribution margin is
$25, the sales necessary to earn an operating income of $30,000
are 10,000 units.
True
False

39. Question 42
1 points
Save
If the property tax rates are increased, this change in fixed costs
will result in an increase in the break-even point.
True
False
Question 43
1 points
Save
As production increases, what should happen to the variable
costs per unit?

40. Stay the same
Increase
Decrease
Either increase or decrease, depending on the fixed costs
Question 44
1 points
Save
Which of the following graphs illustrates the nature of a mixed
cost?

41. Graph 2
Graph 3
Graph 4
Graph 1
Question 45
1 points
Save
Kennedy Co. sells two products, Arks and Bins. Last year,
Kennedy sold 32,000 units of Arks and 18,000 units of Bins.
Related data are:
Unit Selling
Unit Variable
Unit Contribution
Product
Price
Cost
Margin
Arks
$80
$20

42. $60
Bins
120
40
$80
Assuming that last year's fixed costs totaled $910,000, what was
Kennedy Co.'s break-even point in units?
9,100 units
13,000 units
13,227 units

43. 13,542 units
Question 46
1 points
Save
Costs that vary in total in direct proportion to changes in an
activity level are called
fixed costs.
sunk costs.
variable costs.
differential costs.

44. Question 47
1 points
Save
DeGiaimo Co. has an operating leverage of 5. If next year's
sales are expected to increase by 10%, then the company's
operating income will increase by 50%.
True
False
Question 48
1 points
Save
The point where the sales line and the total costs line intersect
on the cost-volume-profit chart represents

45. the maximum possible operating loss.
the maximum possible operating income.
the total fixed costs.
the break-even point.
Question 49
1 points
Save
Total variable costs change as the level of activity changes.
True
False

46. Question 50
1 points
Save
If a business had sales of $4,000,000, fixed costs of $1,200,000,
a margin of safety of 25%, and a contribution margin ratio of
40%, what was the break-even point?
$3,000,000
$2,800,000
$4,800,000
$2,000,000

47. Question 51
1 points
Save
If fixed costs are $450,000 and the unit contribution margin is
$50, the sales necessary to earn an operating income of $30,000
are 14,000 units.
True
False
Question 52
1 points
Save
Winston Co. manufactures office furniture. During the most
productive month of the year, 3,500 desks were manufactured at
a total cost of $84,400. In its slowest month, the company made
1,100 desks at a cost of $46,000. Using the high-low method of
cost estimation, total fixed costs are

48. $56,000.
$28,400.
$17,600.
$29,900.
Question 53
1 points
Save
The relevant range is useful for analyzing cost behavior for
management decision-making purposes.
True
False

49. Question 54
1 points
Save
If fixed costs are $600,000 and the unit contribution margin is
$12, what amount of units must be sold in order to realize an
operating income of $100,000?
33,334
58,334
41,667
50,000

50. Question 55
1 points
Save
If sales are $300,000, variable costs are 60% of sales, and
operating income is $40,000, what is the operating leverage?
3.000
7.500
1.875
4.500
Question 56
1 points
Save
Direct materials cost that varies with the number of units

51. produced is an example of a fixed cost of production.
True
False
Question 57
1 points
Save
Cost behavior refers to the methods used to estimate costs for
use in managerial decision making.
True
False

52. Question 58
1 points
Save
Total fixed costs remain constant as the level of activity
changes.
True
False
Question 59
1 points
Save
Kennedy Co. sells two products, Arks and Bins. Last year,
Kennedy sold 32,000 units of Arks and 18,000 units of Bins.
Related data are:
Unit Selling
Unit Variable
Unit Contribution

53. Product
Price
Cost
Margin
Arks
$80
$20
$60
Bins
120
40
$80
What was Kennedy Co.'s sales mix last year?

54. 40% Arks, 60% Bins
57% Arks, 43% Bins
54% Arks, 46% Bins
64% Arks, 36% Bins
Question 60
1 points
Save
If fixed costs are $350,000, the unit selling price is $75, and the
unit variable costs are $30, what is the break-even sales (in
units)?
3,500 units
7,778 units

55. 11,667 units
4,667 units
Question 61
1 points
Save
Which of the following graphs illustrates the behavior of a total
fixed cost?
Graph 2
Graph 3
Graph 4

56. Graph 1
Question 62
1 points
Save
Given the following cost and activity observations for Merritt
Company’s utilities, use the high-low method to calculate
Merritt’s fixed costs per month.
Cost
Machine Hours
January
$52,600
20,000
February
75,100
29,000
March
57,000
22,000
April
64,000
24,500

57. $25,100
$50,000
$12,500
$2,600
Question 63
1 points
Save
The dollars available from each unit of sales to cover fixed cost

58. and profit is the contribution margin per unit.
True
False
Question 64
1 points
Save
A firm operated at 90% of capacity for the past year during
which fixed costs were $320,000, variable costs were 60% of
sales, and sales were $1,200,000. Operating profit was
$400,000.
$112,000.

59. $144,000.
$160,000.
Question 65
1 points
Save
The difference between the current sales revenue and the sales
at the break-even point is called the
contribution margin.
margin of safety.
price factor.
operating leverage.

60. Question 66
1 points
Save
Which of the following costs is a mixed cost?
Salary of a factory supervisor
Electricity costs of $2 per kilowatt-hour
Rental costs of $5,000 per month plus $0.30 per machine hour
of use
Straight-line depreciation on factory equipment

61. Question 67
1 points
Save
If the minimum acceptable rate of return for investments
exceeds the average rate of return on an asset, the asset should
be purchased.
True
False
Question 68
1 points
Save
Average rate of return equals estimated average annual income
divided by average investment.

62. True
False
Question 69
1 points
Save
If a proposed expenditure of $80,000 for a fixed asset with a 4-
year life has an annual expected net cash flow and net income
of $32,000 and $12,000, respectively, the cash payback period
is 2.5 years.
True
False
Question 70
1 points
Save

63. The methods of evaluating capital investment proposals can be
grouped into two general categories that can be referred to as
(1) methods that ignore present value and (2) present values
methods.
True
False
Question 71
1 points
Save
The anticipated purchase of a fixed asset for $400,000, with a
useful life of 5 years and a $40,000 residual value, is expected
to yield total net income of $200,000 for the 5 years. The
expected average rate of return on investment is 18.2%.

64. True
False
Question 72
1 points
Save
In net present value analysis for a proposed capital investment,
the expected future net cash flows are reduced to their present
values.
True
False
Question 73
1 points
Save

65. One issue to consider when investing in assets in foreign
countries is
that local currency may weaken to the dollar causing adverse
effects on the investment’s return.
that the dollar may weaken to the local currency causing
adverse effects on the investment’s return.
that local currency may be difficult to exchange into dollars
causing problems in receiving a return on the investment.
that dollars may be difficult to exchange into local currency
causing problems in receiving any return on investment.
Question 74
1 points
Save
The excess of the cash flowing in from revenues over the cash
flowing out for expenses is termed net cash flow.

66. True
False
Question 75
1 points
Save
The process by which management plans, evaluates, and
controls long-term investment decisions involving fixed assets
is called
absorption cost analysis.
variable cost analysis.

67. capital investment analysis.
cost-volume-profit analysis.
Question 76
1 points
Save
Which of the following provisions of the Internal Revenue Code
can be used to reduce the amount of the income tax expense
arising from capital investment projects?
Interest deduction
Depreciation deduction
Minimum tax provision
Charitable contributions

68. Question 77
1 points
Save
Qualitative considerations are best evaluated using present
value methods such as internal rate of return.
True
False
Question 78
1 points
Save
In general, present value methods of analyzing capital
investments are more desirable than methods ignoring present
value because

69. the calculations in methods that ignore present value are more
complex than those in methods using present value.
the present value methods consider that a dollar today is worth
more than a dollar in the future due to the potential earning
power of that dollar.
the calculations in methods that consider present value are less
complex than those methods ignoring present value.
the present value methods consider that a dollar in the future is
worth more than a dollar today due to the potential earning
power of that dollar.
Question 79
1 points
Save
The anticipated purchase of a fixed asset for $400,000, with a
useful life of 5 years and no residual value, is expected to yield
total net income of $200,000 for the 5 years. The expected

70. average rate of return on investment is 20%.
True
False
Question 80
1 points
Save
An analysis of a proposal by the net present value method
indicated that the present value exceeded the amount to be
invested. Which of the following statements best describes the
results of this analysis?
The proposal is desirable and the rate of return expected from
the proposal exceeds the minimum rate used for the analysis.

71. The proposal is desirable and the rate of return expected from
the proposal is less than the minimum rate used for the analysis.
The proposal is undesirable and the rate of return expected from
the proposal is less than the minimum rate used for the analysis.
The proposal is undesirable and the rate of return expected from
the proposal exceeds the minimum rate used for the analysis.
Question 81
1 points
Save
The rate of earnings is 10% and the cash to be received in two
years is $10,000. Determine the present value amount, using the
following partial table of present value of $1 at compound
interest.
Year
6%
10%
12%
1
.943
.909
.893
2
.890
.826

72. .797
3
.840
.751
.712
4
.792
.683
.636
$8,900
$8,260
$7,970
$9,090

73. Question 82
1 points
Save
Mars Corp. is choosing between two different capital
investment proposals. Machine A has a useful life of 4 years,
and Machine B has a useful life of 6 years. Each proposal
requires an initial investment of $200,000, and the company
desires a rate of return of 10%. Although Machine B has a
useful life of 6 years, it could be sold at the end of 4 years for
$35,000.
Year
Present Value
of $1 at 10%
1
0.909
2
0.826
3
0.751
4
0.683
5
0.621
6
0.513
Machine A will generate net cash flow of $70,000 in each of the
four years. Machine B will generate $80,000 in year 1, $70,000
in year 2, $60,000 in year 3, and $40,000 per year for the
remaining 3 years of its useful life.

74. Which of the following statements portrays the most accurate
analysis between the two proposals?
Mars should invest in Machine A because the net present value
of Machine A after 4 years is higher than the net present value
of Machine B after 4 years.
Mars should invest in Machine B because the net present value
of Machine A after 4 years is lower and the net present value of
Machine B after 6 years.
Mars should invest in Machine B because the net present value
of Machine A after 4 years is lower than the net present value of
Machine B after 4 years.
Mars should invest in Machine A because the net present value
of Machine A after 4 years is higher than the net present value
of Machine B after 6 years.
Question 83
1 points

75. Save
The management of Hence Corporation is considering the
purchase of a new machine costing $200,000. The company's
desired rate of return is 10%. The present value factors for $1 at
compound interest of 10% for 1 through 5 years are 0.909,
0.826, 0.751, 0.683, and 0.621, respectively. In addition to the
foregoing information, use the following data in determining the
acceptability in this situation:
Income from
Net Cash
Year
Operations
Flow
1
$50,000
$90,000
2
30,000
60,000
3
10,000
50,000
4
5,000
45,000
5

76. 5,000
45,000
The cash payback period for this investment is
5 years.
3 years.
2 years.
4 years.

77. Question 84
1 points
Save
Crane Company is considering the acquisition of a machine that
costs $60,000. The machine is expected to have a useful life of
5 years, a negligible residual value, an annual cash flow of
$15,000, and annual operating income of $15,000. What is the
estimated cash payback period for the machine?
1.7 years
3 years
4 years
5 years
Question 85
1 points
Save

78. The present value index is computed using which of the
following formulas?
Amount to be invested/Average rate of return
Total present value of net cash flow/Amount to be invested
Total present value of net cash flow/Average rate of return
Amount to be invested/Total present value of net cash flow
Question 86
1 points
Save
Capital rationing is the process by which management allocates
funds among competing capital investment proposals.

79. True
False
Question 87
1 points
Save
Average rate of return equals average investment divided by
estimated average annual income.
True
False
Question 88

80. 1 points
Save
When evaluating a proposal by use of the net present value
method, if there is an excess of the present value of future cash
inflows over the amount to be invested, the rate of return on the
proposal exceeds the rate used in the analysis.
True
False
Question 89
1 points
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When evaluating a proposal by use of the net present value
method, if there is an excess of present value over the amount to
be invested, the rate of return on the proposal is more than the
rate used in the analysis.

81. True
False
Question 90
1 points
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Which of the following are present value methods of analyzing
capital investment proposals?
Internal rate of return and average rate of return
Average rate of return and net present value
Net present value and internal rate of return
Net present value and payback

82. Question 91
1 points
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The process by which management allocates available
investment funds among competing capital investment proposals
is termed present value analysis.
True
False
Question 92
1 points
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All of the following qualitative considerations may impact upon
capital investments analysis EXCEPT

83. time value of money.
employee morale.
the impact on product quality.
manufacturing flexibility.
Question 93
1 points
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The rate of earnings is 6%, and the cash to be received in one
year is $10,000. Determine the present value amount, using the
following partial table of present value of $1 at compound
interest.
Year
6%
10%
12%
1
.943

84. .909
.893
2
.890
.826
.797
3
.840
.751
.712
4
.792
.683
.636
$9,430
$9,000
$9,090

85. $8,930
Question 94
1 points
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The management of London Corporation is considering the
purchase of a new machine costing $750,000. The company's
desired rate of return is 6%. The present value factor for an
annuity of $1 at interest of 6% for 5 years is 4.212. In addition
to the this information, use the following data in determining
the acceptability in this situation:
Income from
Net Cash
Year
Operations
Flow
1
$37,500
$187,500
2
37,500
187,500
3
37,500
187,500
4

86. 37,500
187,500
5
37,500
187,500
The present value index for this investment is
1.00.
.95.
1.25.
1.05.

87. Question 95
1 points
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The methods of evaluating capital investment proposals can be
grouped into two general categories that can be referred to as
(1) average rate of return and (2) cash payback methods.
True
False
Question 96
1 points
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The process by which management allocates available
investment funds among competing capital investment proposals
is termed capital rationing.

88. True
False
Question 97
1 points
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Methods that ignore present value in capital investment analysis
include the cash payment method.
True
False
Question 98
1 points

89. Save
A qualitative characteristic that may impact upon capital
investment analysis is the impact of investment proposals on
product quality.
True
False
Question 99
1 points
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The excess of the cash flowing in from revenues over the cash
flowing out for expenses is termed net discounted cash flow.
True

90. False
Question 100
1 points
Save
If the average rate of return on an asset exceeds the minimum
acceptable rate of return for investments, the asset should be
purchased.
True
False
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