Costs and Total Fixed Costs. Essay Example
1
In a process cost system, product costs are summarized:
on job cost sheets.
when the products are sold.
after each unit is produced.
on production cost reports.
What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
the internal rate of return
the discounted payback
the profitability index
the modified internal rate of return
3
Horizontal analysis is also known as:
trend analysis
linear analysis
common size analysis
vertical analysis
4
M&M Proposition 1: Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.
If Dynamo wishes to change its capital structure from 75 percent equity to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they use?
$375
$321
$225
$600
5
Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)
partnership
limited liability partnership
sole proprietorship
corporation
6
The break-even point is where:
total sales equal total fixed costs.
total variable costs equal total fixed costs.
contribution margin equals total fixed costs.
total sales equal total variable costs.
7
Variance reports are:
SEC financial reports
internal reports for management
external financial reports
In a process cost system, product costs are summarized:
on job cost sheets.
when the products are sold.
after each unit is produced.
on production cost reports.
What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
the internal rate of return
the discounted payback
the profitability index
the modified internal rate of return
3
Horizontal analysis is also known as:
trend analysis
linear analysis
common size analysis
vertical analysis
4
M&M Proposition 1: Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.
If Dynamo wishes to change its capital structure from 75 percent equity to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they use?
$375
$321
$225
$600
5
Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)
partnership
limited liability partnership
sole proprietorship
corporation
6
The break-even point is where:
total sales equal total fixed costs.
total variable costs equal total fixed costs.
contribution margin equals total fixed costs.
total sales equal total variable costs.
7
Variance reports are:
SEC financial reports
internal reports for management
external financial reports