1. Which items are necessary in calculating the net present value of a project?

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1. Which items are necessary in calculating the net present value of a project? I. Investment outlays II. Discount rate III. Incremental cash flow IV. Time period for the project I, II and IV I, II and III II, III and IV All of the above

2—- Operating cash flow is generated by a company’s daily operations related to production and sales of goods and/or services. True False

3. Scenario analysis is a way of testing forecasts by changing one assumption at a time. True False

4—

. Suppose a riskless project requires an initial investment of $10 and will generate a one-time cash inflow of $30 two years later. Assuming a risk-free interest rate of 5%, which of the following statements about the project is NOT true? The net present value of the project is positive. The IRR is greater than 50 percent. The accounting rate of return on the project is positive. The payback period is less than 2 years

5—-Analysis of a company’s financial statements: Below are simplified versions of the balance sheet and income statement for Toys by Tom, Inc. Use this information to answer the following question.

Toys by Tom, Inc. has a current ratio of ____, suggesting ________.

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9.6; reasonable ability to cover interest expense

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0.57; potential illiquidity

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0.21; potential collection problems

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1.75; reasonable liquidity

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6—It is possible for a company to grow faster than its sustainable growth rate.

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True

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False

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7—Selecting investment projects according to rules based either on project NPV or IRR results in maximizing firm value.

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True

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False

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8—Analysis of a company’s financial statements: Below are simplified versions of the balance sheet and income statement for Toys by Tom, Inc. Use this information to answer the following question.

What is Toys by Tom, Inc. return on assets (ROA)?

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6.9%

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0.86

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9—Which of the following is commonly used in preparing pro forma statements:

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Historical financial statements

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Projected sales

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Efficiency ratios

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All of the above

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10—-For which of the following generic businesses would you expect a combination of high asset turnover and low profit margins?

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Supermarkets

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Banks

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Software developers

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Airlines

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11—-A company can shorten its cash cycle by:

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Reducing inventory turnover

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Reducing account payables

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Reducing days receivable

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None of the above

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12—For a levered firm, EBIT is equivalent to:

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Net income

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Pro forma earnings

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Operating profit

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Net income before taxes

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13—-The amount by which a project increases the value of the firm is given by the project’s ______.

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accounting rate of return

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net present value (NPV)

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internal rate of return (IRR)

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present value

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14—-A dollar today is worth more than a dollar tomorrow.

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True

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False

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15—The NPV rule, which says companies should invest in projects for which NPV is greater than 0, depends on the assumption of value maximization.

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True

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False

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16—A company has a retention rate of 50%, sales of $25,000, beginning equity of $50,000 and profit margins of 10%, an asset turnover ratio of .75 and debt of $10,000. What is its sustainable growth rate?

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2.5%

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1.7%

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3.75%

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Not enough information given

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17—Common-size financial statements are constructed in order to:

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Adjust for inflation and risk

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Facilitate comparisons of different-sized companies

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To comply with SEC requirements

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All of the above

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18—Leverage and liquidity generally rise or fall together.

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True

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False

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19—Which of the following ratios uses sales in the denominator?

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Days in inventory

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Receivables turnover

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Cash ratio

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Average collection period

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20–What is the present value of a perpetuity of $100 given a discount rate of 5%?

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$2,000

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$3,000

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$1,500

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$500

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21—Compute the net present value of an investment with 5 years of annual cash inflows of $100 and two cash outflows, one today of $100 and one at the beginning of the second year of $50. Use a discount rate of 10 percent.

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$229.08

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$287.60

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$233.62

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$271.53

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Is there a possible conflict between an industry that sells a product that can have negative consequences from the use of its product and the industry’s ability to engage in socially responsible activities?

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Is there a possible conflict between an industry that sells a product that can have negative consequences from the use of its product and the industry’s ability to engage in socially responsible activities?

• What perks do you see in the New Belgium Brewery that could be an added plus to your work environment? Identify at least two of those perks.

• What are the dangers any company might face if its sole focus is the bottom line? Identify at least five of those dangers.

Case Study – New Belgium Brewing

What is the basic situation described in the case? Summarize the Google experience.

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What is the basic situation described in the case? Summarize the Google experience.
What other companies are described in the case as having had to deal with Chinese censorship. What is your opinion of their actions?
What seems to be the policy of Chinese censorship?
What are some U.S. congressional initiatives related to Chinese censorship? Do you support those initiatives?
Did Google make the right choice? What were the different opinions expressed in the case regarding the Google choice? Form an argument.
Submit your work in a 3-page Word document. Apply current APA standards for writing style to your work. All written assignments and responses should follow APA rules for attributing sources.

Read the following case study:

Baron, D. P. (2006, November 15). Google in China. Harvard Business School. HBS Number: P54.

Research one regional trading bloc of which the United States is a member. Describe when the bloc was constituted, which countries are currently members, and which products are included in agreements. What is the economic justification for this trade bloc?

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Research one regional trading bloc of which the United States is a member. Describe when the bloc was constituted, which countries are currently members, and which products are included in agreements. What is the economic justification for this trade bloc? Do you agree with the U.S. involvement in this trading bloc? What does the U.S. gain or lose?
Write your response in 400 words or less. Apply current APA standards for writing style to your work. All written assignments and responses should follow APA rules for attributing sources.

Should governments promote or restrict international trade? Describe at least three ways in which countries can restrict trade.

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Should governments promote or restrict international trade? Describe at least three ways in which countries can restrict trade. Irrespective of your answer, which position—promoting or restricting international trade—is most likely to find support as a national strategy? Why do governments commonly initiate policies that support both positions?

Facts: Kevin Green paid $4,600 cash for a used Camaro from Star Chevrolet. When the car blew a gasket, the dealer refused to give Kevin his money back. Kevin repaired the car himself and drove it on the highway, where it was wrecked. Kevin sued Star, and the trial court awarded him the full price of the car, because he was a minor when he bought it. Star appealed. Issue: Is Kevin Green entitled to disaffirm the contract even though the Camaro has been destroyed?

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Facts: Kevin Green paid $4,600 cash for a used Camaro from Star Chevrolet. When the car blew a gasket, the dealer refused to give Kevin his money back. Kevin repaired the car himself and drove it on the highway, where it was wrecked. Kevin sued Star, and the trial court awarded him the full price of the car, because he was a minor when he bought it. Star appealed.
Issue: Is Kevin Green entitled to disaffirm the contract even though the Camaro has been destroyed?
Holding: The appeals court affirmed judgment for Green but reduced the award to $3,100, based on the car’s salvage value. A minor may disaffirm a contract. He is required to return the consideration only if it is still in his possession. If the minor has wasted, squandered, or otherwise destroyed the consideration, he need not return it and is still entitled to his money back.
1. Question: Star Chevrolet either did not know that Green was entitled to his money back, or knew but refused to honor it. Why was that a particularly costly mistake by Star?
2. Question: Kevin Green knew that he was a minor. Why should he be allowed to make an agreement, wreck a car, and then get his money back?