Question : 53. The primary difficulty in the allocation of overhead costs to : 1284610

 

 

53. The primary difficulty in the allocation of overhead costs to prospective projects is that the: 
A. allocation will reduce the project’s NPV.
B. discount rate is unknown.
C. costs may not represent an incremental expense.
D. expenses may have been previously allocated.

54. Assume that sales revenues are increasing more rapidly than product costs, but that a project’s cash flows have been represented as an annuity when calculating NPV. Which of the following problems may occur? 
A. Nominal cash flows are possibly being discounted with a real rate.
B. Real cash flows are possibly being discounted with a nominal rate.
C. Nominal cash flows are possibly being discounted with a nominal rate.
D. Real cash flows are possibly being discounted with a real rate.

55. A project anticipates net cash flows of $10,000 at the end of year 1, with such amount growing at the expected 5% rate of inflation over the subsequent 4 years. Calculate the real present value of this 5-year cash stream if the firm employs a nominal discount rate of 15%. 
A. $33,522
B. $38,377
C. $43,294
D. $55,000

56. An investment today of $25,000 promises to return $10,000 annually for the next 3 years. What is the approximate real rate of return on this investment if inflation averages 6% annually during the period? 
A. 3.5%
B. 9.7%
C. 14.0%
D. 20.0%

57. What nominal annual return is required on an investment for an investor to experience a 12% gain in purchasing power? Assume inflation to be 4%. 
A. 7.69%
B. 9.29%
C. 12.00%
D. 16.48%

58. Which of the following costs probably should not be allocated to the investment needed for a new project? 
A. Increase in accounts receivable
B. New warehouse, built for this project
C. 25% of the Vice President’s salary
D. Labor expense for employees in new warehouse

59. A parcel of corporate land was recently dedicated as the new plant site. What cost allocation should the land receive, based on the following: original cost of $200,000, market value of $300,000, net book value of $200,000, a recent offer to purchase for $250,000. 
A. $200,000
B. $250,000
C. $275,000
D. $300,000

60. New projects or products can have an indirect effect on the firm as well as a direct effect. Which of the following appears to be an indirect effect of launching a new product? 
A. Additional working capital is required.
B. Sales force will need to be increased.
C. Sales of a similar product of your firm’s will decline.
D. Additional machinery must be purchased.

61. New projects or products can provide positive indirect effects as well as negative effects. Which of the following appears to be a positive indirect effect? 
A. The new, efficient machine uses less electricity.
B. Orders of your complementary products increase.
C. The project has a positive NPV.
D. Accelerated methods of depreciation can be used.

62. Opportunity costs for organizational resources: 
A. are limited to the explicit cash flows involved.
B. are determined according to the marginal tax rate.
C. can involve no cash flows.
D. should not be determined for existing products.

 

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more