Question : 83. Assuming that an asset has been fully depreciated according to : 1284599

 

 

83. Assuming that an asset has been fully depreciated according to its MACRS class life, which of the following statements is correct concerning the value of the asset? 
A. Its market value is zero.
B. Its book value is zero.
C. Its book value is the current market value.
D. It has neither book value nor market value.

84. Why is it likely that firms use straight-line depreciation methods for reporting to shareholders? 
A. It increases the NPV of the project.
B. It decreases the tax liability of the project.
C. It mirrors the market value of the assets.
D. It allows asset balances to decline more slowly.

85. In the MACRS depreciation schedules, the depreciation percentage is lower in the first year than in the second year. This is due to the fact that: 
A. the depreciation percentage increases each year.
B. assets are assumed to be acquired at midyear.
C. depreciation expense increases at the rate of inflation.
D. MACRS depreciation is less attractive than straight-line depreciation.

86. Which of the following typically results from using straight-line depreciation in the set of books for shareholders? 
A. Net income appears higher during the early periods of depreciation.
B. Less money is paid to the Internal Revenue Service.
C. Financial managers have more funds from operations available.
D. Depreciable assets last for a longer period of time.

87. Which of the following statements regarding calculating cash flow from operations is incorrect? 
A. Cash flow from operations = revenues – cash expenses – taxes paid
B. Cash flow from operations = net profit + depreciation
C. Depreciation tax shield = depreciation ? (1 -tax rate)
D. Cash flow from operations = (revenues – cash expenses) ? (1 – tax rate) + (depreciation ? tax rate)

88. Which of the following changes in working capital is least likely, given an increase in the overall level of sales? 
A. An increase in inventories
B. An increase in accounts payable
C. A decrease in accounts receivable
D. An increase in accounts receivable

89. Working capital will affect incremental cash flows if: 
A. current liabilities change more than current assets.
B. current assets change more than current liabilities.
C. inventory changes from previous levels.
D. net working capital changes from previous levels.

90. Which of the following represents a common reason for increases in net working capital with new projects? 
A. Inventory can now be held at lower levels.
B. Accounts receivable are often not paid on time.
C. Inventory increases more than accounts payable increase.
D. Accounts payable must be increased.

91. What is the net effect on a firm’s working capital if a new project requires $30,000 increase in inventory, $10,000 increase in accounts receivable, $35,000 increase in machinery, and a $20,000 increase in accounts payable? 
A. -$5,000
B. +$10,000
C. +$20,000
D. +$55,000

92. If a project is expected to increase inventory by $17,000, increase accounts payable by $10,000, and decrease accounts receivable by $1,000, what effect does working capital have during the life of the project? 
A. Increases investment by $4,000.
B. Increases investment by $5,000.
C. Increases investment by $6,000.
D. Working capital has no effect during the life of the project.

 

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