Based on surveys of comparable firms, which of the following firms “would be most likely to use NPV as its preferred method for evaluating capital projects?
A small public industrial company located in France.
B. A private company located in the United States.
C. A large public company located in the United States.
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Which of the following statements about capital structure and leverage is most accurate?
A. Financial leverage is directly related to operating leverage.
B. Increasing the corporate tax rate will not affect capital structure decisions.
C. A firm with low operating leverage has a small proportion of its total costs in fixed costs.
Which of the following is a key determinant of operating leverage?
A. Level and cost of debt.
B. The competitive nature of the business.
C. The trade-off between fixed and variable costs.
Which of the following statements about the payback period method is least accurate? The payback period:
A. Provides a rough measure of a projects liquidity.
B. Considers all cash flows throughout the entire life of a project.
C. Is the number of years it takes to recover the original cost of the investment.
A share repurchase that begins with a company communicating to shareholders a specific number of shares and a range of acceptable prices is most likely to be a(n):
A. Open market repurchase.
B. Fixed price tender offer.
C. Dutch auction.