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Multiple Questions Answers

1) Sensitivity analysis is rarely done because the data used in most studies is very accurate.

a)  True

b)  False

Multiple Questions Answers

1) BVM sold 25,000 units and was able to breakeven last year.  Variable costs will increase

30% next year.  What information is needed to calculate their new breakeven point?

a) Costs per unit

b) Sales price per unit and costs per unit

c) Total fixed costs, sales price per unit, and costs per unit

d)  No additional data is needed.

2) The probability distributions for NPW for two mutually exclusive alternatives are shown in the table. Assume the NPW random variables are independent.

Multiple Questions Answers

1) The price of Gas is $3.39 in December 2011 and it was $4.10 in December 2008.  What is the average inflation rate for gas over these three years?

a)  6.14%

b)  5.77%

c)   -6.14%

d)   -5.77%

Multiple Questions Answers

1) In 2010, Trucking Inc. had $1,250,000 in revenues and $1,013,000 in expenses. What are the Average and Marginal Tax rates respectively? (round to nearest whole percent)

a)  29% Average, 25% Marginal

b)  39% Average, 31% Marginal

c) 32% Average, 39% Marginal

d)  34% Average, 39% Marginal

Multiple Questions Answers

1)  MACRS deductions are a combination of which other methods of depreciation?

a)  Sum-of-year’s-digits and straight line

b)  Sum-of-year’s-digits and declining balance

c)  Double declining balance and 150% declining balance

d)  Double declining balance and straight line

Multiple Questions Answers

1)  Which of the following is not a requirement for an asset to be depreciable?

a)  It must have a life longer than 1 year.

b)  It must have a cost basis greater than $1,000.

c)  It must be held with the intent to produce income.

d)  It must wear out or get used up.

Multiple Questions Answers

1)  Which of the following is an example of a fixed cost?

a) Equipment cost

 b)   Power cost

c)  Labor cost

d)  Material cost

2)  Which of the following is an example of a variable cost?

a)  Building cost

b)  Equipment cost

c) Labor cost

d)  Property taxes

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