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According to the NPV acceptance criterion, projects: (Points : 1) with a positive NPV should be accepted, since they are value increasing. with the highest NPV should be accepted. with an NPV over $10,000 should be accepted, since value increases less than that are trivial. are acceptable only if the ratio of benefits to costs is greater than zero.

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According to the NPV acceptance criterion, projects: (Points : 1)

       with a positive NPV should be accepted, since they are value increasing.

       with the highest NPV should be accepted.

       with an NPV over $10,000 should be accepted, since value increases less than that are trivial.

       are acceptable only if the ratio of benefits to costs is greater than zero.

 
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GMX Resources, an independent oil and gas exploration and production company, has a tax rate of 38%. If it purchases $2,000,000 of drilling pipe, what is the after-tax cost of this expenditure? (Points : 1) $760,000 $1,240,000 $2,000,000 $2,760,000

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GMX Resources, an independent oil and gas exploration and production company, has a tax rate of 38%. If it purchases $2,000,000 of drilling pipe, what is the after-tax cost of this expenditure? (Points : 1)

       $760,000

       $1,240,000

       $2,000,000

       $2,760,000

 
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When determining the cash flows for a proposed investment, we generally ignore overhead. Many overhead costs are fixed and will be paid whether the project is accepted or not, so they are not incremental

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5. When determining the cash flows for a proposed investment, we generally ignore overhead. Many overhead costs are fixed and will be paid whether the project is accepted or not, so they are not incremental. Which item on the following list, though similar to overhead, would be included as an incremental cash flow? (Points : 1)

  • the cost of a new managerial position specifically for a proposed project
  •        the allocation of factory floor space by square feet or square meters utilized by a proposed project
  •        the allocation of time that salaried managers used developing a proposed project
  •        the allocation of headquarters rent or lease expense based on anticipated revenue of a proposed project
 
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All else being equal, as debt replaces equity in a profitable company’s capital structure, which of the following occurs? (Points : 1) Interest expense increases, reducing taxable income and reducing taxes. Interest expense increases, reducing net income and earnings per share. Interest expense increases, reducing cash flows available to shareholders. Interest expense increases, reducing profitability and the wealth of shareholders.

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