PRIN.OF CORPORATE FINANCE >BI<
12th Edition
ISBN: 9781260431230
Author: BREALEY
Publisher: MCG CUSTOM
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Textbook Question
Chapter 12, Problem 6PS
Economic income Fill in the blanks: “A project’s economic income for a given year equals the project’s ____ less its ____
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The economic service life of a project is best described as _____________________?
a. Another term for the analysis period of a benefit-cost analysis.b. The number of years for which depreciation is on-going for an asset.c. The present worth of the project after taxes.d. The amount of time (usually in years) that an asset should be used to achieve thesmallest annual cost of operation.
Which of the following would DECREASE the NPV of a project being considered, other things held constant?
Group of answer choices
Spreading over the initial investment over the first two years rather than making it in the first year.
A decrease in net working capital in year 1.
A decrease in the cost of capital for the project.
All of the changes would increase the NPV of a project.
A shift from straight line to MACRS depreciation method.
Other things held constant, which of the following would increase the NPV of a project being considered?
A shift from straight-line depreciation to MACRS
Making the initial investment in the first year rather than spreading it out over the first three years
An increase in the discount rate associated with the project
An increase in required net operating working capital
None of the above
Chapter 12 Solutions
PRIN.OF CORPORATE FINANCE >BI<
Ch. 12 - Prob. 1PSCh. 12 - Terminology Define the following: a. Agency costs...Ch. 12 - Prob. 3PSCh. 12 - EVA Here are several questions about economic...Ch. 12 - Accounting measures of performance The Modern...Ch. 12 - Economic income Fill in the blanks: A projects...Ch. 12 - Prob. 7PSCh. 12 - Prob. 8PSCh. 12 - Prob. 9PSCh. 12 - Prob. 10PS
Ch. 12 - Management compensation We noted that management...Ch. 12 - Prob. 12PSCh. 12 - Prob. 13PSCh. 12 - Prob. 14PSCh. 12 - EVA Herbal Resources is a small but profitable...Ch. 12 - Prob. 16PSCh. 12 - Economic income Consider the following project:...Ch. 12 - EVA Use the Beyond the Page feature to access the...Ch. 12 - Accounting measures of performance Use the Beyond...Ch. 12 - EVA Ohio Building Products (OBP) is considering...
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