PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 29, Problem 17PS
Summary Introduction
To determine: The true and false statements.
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Which of the following statement is TRUE about the financial planning?A) Financial planning should attempt to minimize risk.B) Financial planning is necessary because financing and investment decisions interact and should not be made independently.C) Firms’ planning horizons rarely exceed three years.D) Financial planning models should include as much detail as possible.
Forecasting a firm's future sales is the key element in developing a financial plan, yet forecasting can be extremely difficult in some industries. If forecast is very poor, does this mean that the financial planning process if not worthwhile? Explain your answer.
Which of the statement is TRUE in financial decision making?
A. When the economy is growing of proceeding towards recovery, the finance manager should not be eager to avail of investment opportunities.
B. When the economy is facing a slump, the finance manager should proceed with opportunities.
C. When the economy is facing a slump, the finance manager should proceed with care.
Chapter 29 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 29 - Sources and uses of cash State whether each of the...Ch. 29 - Sources and uses of cash Table 29. 11 shows...Ch. 29 - Prob. 3PSCh. 29 - Sources and uses of cash and working capital...Ch. 29 - Prob. 5PSCh. 29 - Prob. 6PSCh. 29 - Cash cycle A firm is considering several policy...Ch. 29 - Collections on receivables Here is a forecast of...Ch. 29 - Collections on receivables If a firm pays its...Ch. 29 - Forecasts of payables Dynamic Futon forecasts the...
Ch. 29 - Cash budget Table 29.13 lists data from the budget...Ch. 29 - Short-term financial plans a. Paymore places...Ch. 29 - Short-term financial plans Which items in Table...Ch. 29 - Short-term financial plans Work out a short-term...Ch. 29 - Prob. 16PSCh. 29 - Prob. 17PSCh. 29 - Long-term financial plans Corporate financial...Ch. 29 - Prob. 19PSCh. 29 - Prob. 20PSCh. 29 - Long-term financial plans Construct a new model...Ch. 29 - Long-term financial plans a. Use the Dynamic...Ch. 29 - Long-term financial plans Table 29.15 summarizes...Ch. 29 - Long-term financial plans Abbreviated financial...Ch. 29 - Prob. 25PSCh. 29 - Forecast growth rate What is the maximum possible...Ch. 29 - Forecast growth rate a. What is the internal...Ch. 29 - Forecast growth rate Bio-Plasma Corp. is growing...Ch. 29 - Long-term plans Table 29.18 shows the 2019...
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- 4. In time value of money, we use five categories of information, viz., present value, future value, discount rate, number of compounding periods and interim payments. In particular, the choice of the right discount rates is a challenge as it represents a combination of risk factors, such as business; inflation; environmental; social and political risks. Your company is planning an investment project in commercial forestry. Prepare a briefing note appraising the top management on the potential risks in evaluating a project in commercial forestry and how will this impact the project decisions.arrow_forwardWhich of the following decision criteria is the easiest to use and very popular among investors? O Payback period. O Internal rate of return. O Average accounting return. Net present value. O Discounted return on investment.arrow_forwardWhich one of these statements is correct? Accountants record sales and expenses after the related cash flows occur. The value of an investment depends on the size, timing, and risk of the investment's cash flows. Individuals tend to prefer later cash flows over current cash flows. When selecting one of two projects, managers should select the project with the higher total expected cash flow Most investors prefer greater risk over less risk.arrow_forward
- Rational investors prefer to receive money today rather than the same amount of money in the future. Why is the consideration of time is important in financial decision making, how can time value be adjusted?arrow_forwardWhat is the limitation of Traditional approach of Financial Management? اخترأحد الخيارات a. All of the option b. More emphasis on long term problems c. Ignores allocation of resources d. One-sided approacharrow_forward. Rational investors prefer to receive money today rather than the same amount of money in the future. Why is the consideration of time is important in financial decision making, how can time value be adjusted. Explain in Detail.arrow_forward
- What is the first step in preparing a financial plan? Group of answer choices A forecast of revenue over some future time period Estimate how many additional assets the company will need Estimate the funds needed to implement the strategies Determine the expected level of profits for future periodsarrow_forwardWhich of the following statements is NOT CORRECT? a. The cash budget is useful for estimating potential funding needs, especially for short-term working capital loans. b. Working capital management is critical because it affects financing decisions and the firm's profitability. c. Credit policy affects working capital because it impacts both sales and the time it takes for receivables to be obtained. d. If a company needs to increase its cash flow from operations in the next month or two, it can change its credit policy from 2/10 net 30 to net 60. e. f a company is unsure about the volume of sales, profits, and cash flows for the coming year, it will retain a relatively large amount of cash and marketable securities.arrow_forwardWhich of the following statements are not true Select one: a. Profitability Index is a discounted technique b. Capitalisation are the total securities issued by a company c. Cash flows occurs over a series of years in capital budgeting decisions d. Some investment decisions are irreversible e. Borrowing is cheap compared to equityarrow_forward
- Which of the following scenario shows the financial manager’s financing function? a. Prioritizing investments based on properly computed capital rationing method. b. Capital budgeting computation and decision with regards to the planned acquisition. c. Assessing and selecting a long-term and short-term financing tools that has a low cost. d. Monitoring trends in operating expenses for the purpose of budget allocation.arrow_forwardRisk in cash flow estimating for capital budgeting can be defined as: a. the chance that a cash flow will turn out to be worse than the estimate. b. the chance that a cash flow will turn out to be different than the estimate, either better or worse. c. the chance that the cash flows that turn out to be more favorable than the estimate won't totally offset the cash flows that turn out to be worse than the estimate. d. the chance that the NPV and/or IRR will turn out to be worse than the estimate. e. all of the above describe the risk in cash flow estimating.arrow_forwardAnswer true of false to each of the following. briefly explain your reasoning for each answer a. All else equal, increasing the projected amount of accounts receivable in a financial forecast will increase external funding required. b. Estimates of external funding required based on cash flow forecasts are usually higher than estimates based on pro forma financial statements. c. An annual financial forecast for 2018 showing no external funding required assures a company that no cash shortfalls are likely to occur during 2018.arrow_forward
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