Accounts Objective Questions

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21.The following cash flows should be treated as incremental flows when deciding whether to go ahead with an electric car project except ______. (Points: 5) the consequent reduction in sales of the company's existing gasoline models ( i.e.: incidental effects) interest payment on debt

the value of tools that can be transferred from the company's existing plants the expenditure on new plants and equipment

22. Money that a firm has already spent or committed to spend regardless of whether a project is taken is called ______. (Points: 5) fixed cost
opportunity cost
sunk cost
none of the above

23. A firm has a general-purpose machine, which has a book value of $400,000 and is sold for $600,000 in the market. If the tax rate is 30%, what is the opportunity cost of using the machine in a project? (Points: 5) $600,000

none of the above

24. Capital equipment costing $250,000 today has 50,000 salvage value at the end of 5 years. If the straight line depreciation method is used, what is the book value of the equipment at the end of two years? (Points: 5) $200,000


25. Which of the following portfolios have the least risk? (Points: 5) a portfolio of Treasury bills
a portfolio of long-term United States Government bonds
portfolio of U.S. common stocks of small firms
none of the above

26. Which portfolio had the highest average annual (real) return between 1900 and 2003? (Points: 5) a portfolio of U.S. Common stocks
a portfolio of U.S. government bonds
a portfolio of Treasury bills
none of the given answers

27. Spill Oil Company's stocks had -10%, 13% and 27% rates of return during the last three years respectively; calculate the average rate of return for the stock. (Points: 5) 10% per year
8% per year
12% per year
none of the above

28. The portion of the risk that can be eliminated by diversification is called _____. (Points: 5) market risk
unique risk
interest rate risk...
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