Project A has an IRR of 20 percent while Project B has an IRR of 30 percent. Under which of the following situations might you be inclined to select Project A, assuming the projects to be mutually exclusive, lending projects?
A) Project A requires cash outflows in the final period.
B) Project A requires a smaller initial investment.
C) Project A requires a larger initial investment.
D) Project A is more risky.
Answer: C) Project A requires a larger initial investment.
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A firm is operating at 90 percent of capacity. This information is primarily needed to project which one of the following account values when compiling pro forma statements?
A. sales B. costs of goods sold C. accounts receivable D. fixed assets E. long-term debt
Susan, the beneficiary on John's $500,000 life policy, chose life-only as her settlement option. Susan received 5 years of settlement checks from the insurance company, totaling $150,000. How much will Susan's beneficiary receive upon her death?
A) Nothing, because life-only states that when the beneficiary dies, any remaining death benefit is kept by the insurance company B) Susan's beneficiary will receive checks for the rest of his life C) $350,000 minus taxes and fees D) 350000"