##### Comparable ratios are the only way to measure horizon value. True-(Answered)

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**Question**

Comparable ratios are the only way to measure horizon value.

?True

?False

?True

?False

TBS's working capital policy is to have a large investment in current assets and to use a small amount of short-term debt. As a result, part of their temporary current assets are financed with long-term debt. TBS has a (an) ______ working capital policy.

A. | Conservative |

B. | Aggressive |

C. | Moderate (matching) |

Tali is considering a new project. The project will generate revenues of $16 million and operating costs of $9,000,000 annually for the next 5 years. Interest expense is $1,000,000 per year. It requires an additional machine that costs $15 million dollars and will be fully depreciated (to a zero book value) on a straight?line basis over 5 years. The machine has a salvage value of $2,000,000. Tali's tax rate is 30%. The beta of the project is 1.10. The risk-free return is 5% and the return on the market is 15%. What is the net present value of the project?

A. | 2,317,039 |

B. | 4,657,461 |

C. | 2,365,456 |

D. | 4,943,129 |

E. | 2,651,124 |

Which of the following is an advantage of comparable measures?

A. | It is easy to incorporate firm-specific information |

B. | It incorporates what you can do with the asset |

C. | It relies on comparable accounting measures |

D. | It contains market information on the value |

With the weighted average cost of capital, the impact of interest expense is picked up in

A. | The cash flows |

B. | An adjustment at the end |

C. | The discount rate |

Which method values equity instead of the entire firm?

A. | Adjusted present value |

B. | Weighted average cost of capital |

C. | Flow to equity |

Paper#9209530 | Written in 27-Jul-2016

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