01/12/2015

Question 1

Tower Inc. sells a product that is a close substitute for a product offered by Westco. Historically, management of Tower has observed a coefficient of cross-elasticity of 1.5 between the two products. If management of Tower anticipates a 5% increase in price by Westco, how would this action by Westco’s management be expected to affect the demand for Tower’s product?

Answer 1

A coefficient of cross-elasticity of 1.5 would mean that a 5% increase in the price of the substitute would result in a 7.5% (5% × 1.5) increase in demand for Tower’s product.

Question 2

HOW DIRECTORS WOULD BE ELECTED WOULD BE INCLUDED IN THE BYLAWS

Answer 2

NOT IN THE ARITCLES OF INCORPORATION

Question 3

IMPROPER??? IS NOT A REASON FOR IC BREAKDOWN

Answer 3

DESIGN

Question 4

THE HELP DESK IS THE RESPONSIBILITY OF THE?

Answer 4

COMPUTER OPERATIONS UNIT

Question 5

The standard account will cost $10 per month plus $8 in check charges (80 × $0.10) = $18, or $216 per year. The premium account will have no fee but will require an additional $2,000 ($2,500 – 500) of funds on deposit. The interest cost on $2,000 for the year is $200 ($2,000 × 10%). Therefore, the cost of the premium checking is less by $16.

Answer 5

The standard account will cost $10 per month plus $8 in check charges (80 × $0.10) = $18, or $216 per year. The premium account will have no fee but will require an additional $2,000 ($2,500 – 500) of funds on deposit. The interest cost on $2,000 for the year is $200 ($2,000 × 10%). Therefore, the cost of the premium checking is less by $16.

Question 6

processing data through simulated files gives an auditor information about the operating effectiveness of control policies and proceedures….one technique involved in this approach is to make use of an?????

Answer 6

integrated test facility

Question 7

induced investment is an investment made in an economy due to changes in??????

Answer 7

national income.

Question 8

corporate intranets have higher security risks and lower costs than ????? ?????? ??????

Answer 8

wide area networks

Question 9

Reconciliations would be an example of a ?????control activity

Answer 9

detective

Question 10

a denial of service attach happens when a companies servers are?

Answer 10

overwhelmed with false requests and crash….

Question 11

Some of the key characteristics of emerging market economies include low debt-to-GDP ratios, a significant increase in trade among and between emerging market economies, low-cost labor, high savings rates, large currency reserves, and high investment in infrastructure.

In addition, most emerging market economies are experiencing rapid growth in the number of middle-class consumers while many are improving supply-chain linkages in an attempt to capture more of value-added costs during the production process.

Answer 11

Some of the key characteristics of emerging market economies include low debt-to-GDP ratios, a significant increase in trade among and between emerging market economies, low-cost labor, high savings rates, large currency reserves, and high investment in infrastructure.

In addition, most emerging market economies are experiencing rapid growth in the number of middle-class consumers while many are improving supply-chain linkages in an attempt to capture more of value-added costs during the production process.

Question 12

There are …….levels of interdependence in integrated planning

Answer 12

three…..pooled, sequential, and reciprocal

Question 13

The DATA CONTROL GROUP is responsible for ensuring that data is processed correctly and that input and output is reconciled

Answer 13

functions of the data control group

Question 14

his answer is correct. The net present value is equal to the present value of the future after tax cash flows minus the initial investment. The after tax annual cash flows are calculated by taking the before tax cash flows and deducting the income taxes. Since depreciation is deductible for tax purposes, income taxes for year two are $3,000 ([$30,000 cash flows – $20,000 depreciation] × 30%). Therefore, after tax cash flows are equal to $27,000 ($30,000 cash flows before taxes – $3,000 taxes). The present value of $27,000 received annually for 5 years discounted at 8% is $107,811 ($27,000 × 3.993). To properly evaluate the project, the investment in working capital must be considered a part of the initial investment, and its recovery at the end of year 5 must be discounted back to its present value. The present value of $5,000 received at the end of 5 years is $3,405 ($5,000 × .681). Therefore, the net present value of the investment is calculated as

Present value of annual cash flows $ 107,811
Present value of recovery of investment in working capital 3,405
Less: Initial investment ($100,000 + 45,000) ($ 105,000)
Net present value of the investment $ 6,216

Answer 14

his answer is correct. The net present value is equal to the present value of the future after tax cash flows minus the initial investment. The after tax annual cash flows are calculated by taking the before tax cash flows and deducting the income taxes. Since depreciation is deductible for tax purposes, income taxes for year two are $3,000 ([$30,000 cash flows – $20,000 depreciation] × 30%). Therefore, after tax cash flows are equal to $27,000 ($30,000 cash flows before taxes – $3,000 taxes). The present value of $27,000 received annually for 5 years discounted at 8% is $107,811 ($27,000 × 3.993). To properly evaluate the project, the investment in working capital must be considered a part of the initial investment, and its recovery at the end of year 5 must be discounted back to its present value. The present value of $5,000 received at the end of 5 years is $3,405 ($5,000 × .681). Therefore, the net present value of the investment is calculated as

Present value of annual cash flows $ 107,811
Present value of recovery of investment in working capital 3,405
Less: Initial investment ($100,000 + 45,000) ($ 105,000)
Net present value of the investment $ 6,216

Question 15

A company has $1,500,000 of outstanding debt and $1,000,000 of outstanding common equity. Management plans to maintain the same proportions of financing from each source if additional projects are undertaken. If the company expects to have $60,000 of retained earnings available for reinvestment in new projects in the coming year, what dollar amount of new investments can be undertaken without issuing new equity?

Answer 15

This answer is correct. The proportion of equity in the financial structure of the firm is the value of outstanding equity divided by the total value of all financing sources.

VALUE OF EQUITY/VALUE OF DEBT+VALUE OF EQUITY

1,000,000/1,000,000+1,500,000=.40

Since the question states that the firm will maintain the same weight of each financing source, each dollar invested is composed of 40 cents of equity and 60 cents of debt. The first $60,000 of equity used in financing new projects is sourced from retained earnings. This source of equity is exhausted when the firm reaches an investment level of

$60,000 / .4 = $150,000.

When the level of investment exceeds this amount, equity financing must be raised externally.

Question 16

The comparable uncontrolled price, the resale price, and the cost-plus approach to set transfer prices are all methods allowed by the IRS in an attempt to

Answer 16

CONTROL TRANSFER PRICING MANIPULATION

Question 17

A DATABASE MANAGEMENT SYSTEM WILL NOT?????

Answer 17

RUN APPLICATION PROGRAMS

Question 18

Later cash inflows have a lower present value than earlier cash inflows, since the present value of a dollar is higher the sooner it is received. Projects with later cash flows will have lower net present values, for any given discount rate, than will projects with earlier cash flows, everything else being equal. Hence, projects with later cash flows will have a lower internal rate of return (IRR).

The IRR is the discount rate that sets the net present value (NPV) of a project equal to zero. NPV is calculated as follows: NPV = Present value of cash inflows - Investment cost. If the discount rate is higher, the present value of the cash inflows is lower. If the investment cost is lower, then a higher discount rate will be required to set the net present value to zero.
The larger the cash inflows, the higher the IRR.
Projects with shorter payback periods have higher cash inflows early in the life of the project, which means a higher IRR.

Answer 18

Later cash inflows have a lower present value than earlier cash inflows, since the present value of a dollar is higher the sooner it is received. Projects with later cash flows will have lower net present values, for any given discount rate, than will projects with earlier cash flows, everything else being equal. Hence, projects with later cash flows will have a lower internal rate of return (IRR).

The IRR is the discount rate that sets the net present value (NPV) of a project equal to zero. NPV is calculated as follows: NPV = Present value of cash inflows - Investment cost. If the discount rate is higher, the present value of the cash inflows is lower. If the investment cost is lower, then a higher discount rate will be required to set the net present value to zero.
The larger the cash inflows, the higher the IRR.
Projects with shorter payback periods have higher cash inflows early in the life of the project, which means a higher IRR.

Question 19

Accounting profit equals revenue minus explicit costs (cash expenditures). Accounting profit does not take into account implicit costs (earnings that could have been received had the resources been used in an alternative use).

Opportunity costs are a form of implicit cost. Explicit costs are not opportunity costs.

Answer 19

Accounting profit equals revenue minus explicit costs (cash expenditures). Accounting profit does not take into account implicit costs (earnings that could have been received had the resources been used in an alternative use).

Opportunity costs are a form of implicit cost. Explicit costs are not opportunity costs.

Question 20

Analysis and review of budgets is not?

Answer 20

Strategic planning….

Question 21

EXPONENTIAL SMOOTHING IS A ?????FORCASTING TECHNIQUE

Answer 21

SALES

Question 22

Allows customers to pay for goods or services from a website while maintaining financial privacy…

Answer 22

E-CASH SUCH AS BITCONS

Question 23

Using the project profitability index to rank the proposals:

           NPV     Investment
         ------    ----------
    A:   $3,200 / $ 8,000 = 0.4
    B:   $3,600 / $12,000 = 0.3
    C:   $2,500 / $10,000 = 0.25
    D:   $2,000 / $ 4,000 = 0.5
The order of preference then should be D, A, B, C.

Answer 23

Using the project profitability index to rank the proposals:

           NPV     Investment
         ------    ----------
    A:   $3,200 / $ 8,000 = 0.4
    B:   $3,600 / $12,000 = 0.3
    C:   $2,500 / $10,000 = 0.25
    D:   $2,000 / $ 4,000 = 0.5
The order of preference then should be D, A, B, C.