Day 31 Flashcards
Equation: net cost of debt
= effective interest rate × net effect of tax
MCQ-05247
Equation: cost of preferred stock
= Preferred Stock Dividend (Par × Rate) ÷ Net Proceeds of Preferred Stock
MCQ-05180
What is needed to estimate the cost of equity capital?
- Current dividends per share (D)
- Expected growth rate in dividends (g)
- Current market price per share of Common stock (P)
MCQ-03920
Equation: Profitability Index of a project
= Present Value of Net Future Cash Inflows ÷ Present Value of Net Initial Investment
MCQ-06625
Define: Mixed Costs
Includes both fixed and variable costs
MCQ-03465
What are the characteristics of a flexible budget?
- Adjusts the budget amounts for different levels of activity
- Identifies volume components of variances from planned activity
MCQ-05862
Define: Operating Budgets
Describe the plan for revenue and expenses and the supporting schedules that go with them
Ex: Sales, Materials, Labor, Overhead, Production
MCQ-04004
Define: Capital Budgets
Plan for purchase of Capital assets
Note: Capital Budgets only affect Operational Budgets through their subsequent effect on expense via depreciation
MCQ-04004
Equation: Investment Turnover
= Sales ÷ Average Investment
MCQ-06659
What would decrease the NPV?
Increase the Discount Rate
MCQ-03797
What are period Costs under variable method?
- Variable SG&A
- Fixed SG&A
- Fixed Overhead
MCQ-07735
When developing a Capital budget, what input would be most helpful?
Profit center equipment requests
MCQ-04832