corp fin prob

The uncertainty in return on assets due to the nature of a firm’s operations is known as: A) financial leverage. B) tax efficiency. C) business risk.

C?

C?

C gotta be it

correct it was C. In a world with taxes and brokerage costs: A) Modigliani and Miller say that dividend policy is irrelevant. B) dividend policy may be relevant. C) Modigliani and Miller say that dividend policy is relevant.

C

A - self made dividends?

answer is B - dividend policy may be relevant. Jackson Huang is an analyst for Oswald Technologies. Huang is considering a $150 million capital project that is expected to produce operating earnings before interest and taxes of $80 million per year for all three years of the project’s life. The project is being depreciated on a straight-line basis and at the end of 3 years the project will have zero salvage value. Huang believes the project is an average risk project for the firm and is planning to apply Oswald’s weighted average cost of capital (WACC) of 8% and tax rate of 30% to the project. Huang’s supervisor has asked him to use both the economic income and economic profit approaches to analyze the project. After completing his analysis, Huang makes the following statements to his supervisor. Statement 1: In the first year of the project’s life, the economic income exceeds the economic profit generated from the project. Statement 2: The discount rate applied to the economic profit to calculate the project’s net present value (NPV) will be identical to the economic rate of return earned by the project each year. How should Huang’s supervisor respond to his statements? A) Agree with both. B) Agree with neither. C) Agree with one only. All else equal, which of the following statements about operating leverage is FALSE? A) Lower operating leverage generally results in a higher expected rate of return. B) Operating leverage reflects the tradeoff between variable costs and fixed costs. C) Firms with high operating leverage experience greater variance in operating income.

> All else equal, which of the following statements > about operating leverage is FALSE? > > > A) Lower operating leverage generally results in > a higher expected rate of return. > > B) Operating leverage reflects the tradeoff > between variable costs and fixed costs. > > > C) Firms with high operating leverage experience > greater variance in operating income. A?

swaptiongamma Wrote: ------------------------------------------------------- > > All else equal, which of the following > statements > > about operating leverage is FALSE? > > > > > > A) Lower operating leverage generally results > in > > a higher expected rate of return. > > > > B) Operating leverage reflects the tradeoff > > between variable costs and fixed costs. > > > > > > C) Firms with high operating leverage > experience > > greater variance in operating income. > > > A? correct. How about the previuos one? In general, a corporate governance system will NOT strive to manage a potential conflict of interest that may arise between management and which of the following groups? A) Creditors. B) Employees. C) Auditors.

I am in the kitchen cooking food - so can’t do the calculation one. This next question on Corp govn is - C?

C for corp governance what you cooking?

It’s called Rajma :wink:

C is correct. Auditors suck anyways. Just finished quick 30 question test- 80%. Not bad to end my studying. Any good indian dish? see you all tomorrow …when this stupidity continues

swaptiongamma Wrote: ------------------------------------------------------- > It’s called Rajma :wink: rajma chawal (spelling)?

I am Northie - so Roti only, no chawal

but chawal goes so well with rajma… are you on the west coast…or is this a late-night craving?

swaptiongamma Wrote: ------------------------------------------------------- > I am Northie - so Roti only, no chawal haha. Do they even cook rajma? It’s always rassam!

Rajma Chawal is like Burrito bowl from Chipotle Mexican grill. me NYC

swaptiongamma Wrote: ------------------------------------------------------- > Rajma Chawal is like Burrito bowl from Chipotle > Mexican grill. > > me NYC absolutely not