To minimize dead weight loss resulting from taxation, A.tax rates should increase in times of need and reduced in other periods. B.tax rates should be kept stable over time. C.tax rates should alternate between 0 and higher rates every other year. D.tax revenue should be maximized.

SECTION B Answer all the questions below:. B1) Do you think capital budgeting is important? Justify? B2) List all the techniques of Capital Budgeting? You think are relevant today? B3) Do you think that these techniques are really helpful to financial managers? B4) Do you think that these techniques can be used in situations like COVID-19? B5) According to you which technique is better and why?

External fundng needs tend to ____ at the end of economic expansion and ____ during recessions. peak; bottom out bottom out; bottom out neither

All of the following are data rules associated with capital budgeting EXCEPT:   a. Include changes across the full life cycle of the product or service.   b. Include changes in every functional area of the business.   c. Include financing flows in the cash flows of all proposed projects.   d. Include forecasted inflation in the cash flow estimates.

Business Finance Cash Flows and Budgets What is the depreciable basis? A It is the cost of capital (both debt and equity) that can be depreciated and the cost spread over multiple years of the project. B It is the cost of debt (interest) that can be depreciated and the cost spread over multiple years of the project. C It is the fully installed cost of an asset that taxing authorities allow to be written off for tax purposes. D It is the cost of all items expended prior to the decision to accept a project and are added to the cost of the asset and written off for tax purposes. All Rights Reserved

Determine the following: 1. Determine the initial investment required by the press. 2. Determine the annual after tax cash inflows attributable to the press from year 1 to 4 3. Determine the after tax cash flow on year 5. 4. ASSUMING the project’s IRR is 25%, the discount rate should be above 25% for the project to have a PW higher than zero (true or false) 5. Assuming that at the very last minute, you are able to sell the equipment for 200,000 (without altering the book value). What is the cash flow on year 5? PROBLEM: Wells Printing is considering expanding its business by purchasing a printing press. The cost of the press is $2 million. Installation costs amount to $200,000. As a result of acquisition of the press, sales in each of the next 5 years are expected to be $1.6 million from this new line of business, but product costs (excluding depreciation) will represent 50% of sales. The press will not affect the firm’s net working capital requirements. The press will be depreciated…

According to the trade-off theory, the optimal capital structure is the level of debt that O minimizes the financial distress costs. equates the present values of the incremental interest tax shield and the incremental financial distress costs. maximizes the after-tax cash flows that are internally generated. maximizes the present value of the interest tax shield.

Suppose a government starts spending less than it receives in tax revenue each year. All else equal, this action would cause the net present value of firms' projects to do what: a. Increase b. Decrease c. Change uncertainly d. Not change

Question 1 The payback period is often used to make capital budgeting decisions because it is considered easy to calculate and easy to understand. O True O False

Which of the following would you NOT consider when making a capital budgeting decision? A. the change in direct labor expense due to the purchase of a new machine B. the cost of a marketing study completed last year C. the opportunity to lease out a warehouse instead of using it to house a new production line D. the additional taxes a firm would have to pay in the next year