gb550 unit 5 quiz
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1. Senbet Ventures is considering starting a new company to produce stereos. The sales price would be set at 1.5 times the variable cost per unit; the VC/unit is estimated to be $2.50; and fixed costs are estimated at $120,000. What sales volume would be required in order to break even, i.e., to have an EBIT of zero for the stereo business? (Points : 2) 86,640
91,200
96,000
100,800
11.64% 11.99% 12.35% |
11.68% 12.30% 12.94% |
8.22% 8.65% 9.10% |
9.91% 10.44% 10.96% |
The beta coefficient, bi, of a relatively safe stock. The most appropriate risk-free rate, rRF. The expected rate of return on the market, rM. |
The payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects. The discounted payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects. The net present value method (NPV) is generally regarded by academics as being the best single method for evaluating capital budgeting projects. |
False |
One drawback of the regular payback for evaluating projects is that this method does not properly account for the time value of money. If a project’s payback is positive, then the project should be rejected because it must have a negative NPV. The regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem. |
Question 10. 10. Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting? (Points : 2) |
Long-term debt.
Accounts payable.
Retained earnings.
Common stock.
- 10 years ago
gb550 unit 5 quiz
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