All of the following are useful for understanding Profitability Index, except:
A. A profitability index less than 1 equals a negative NPV.
B. A profitability index greater than 1 equals a positive NPV.
C. The denominator for the profitability index is the cost of the project.
D. The initial investment is excluded when calculating the present value of the future cash flows.
E. The initial investment is included when calculating the present value of the future cash flows.
Ans: E. The initial investment is included when calculating the present value of the future cash flows.
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The legal contract setting forth the terms and provisions of a corporate bond is a(n) ________
A) indenture B) debenture C) loan document D) promissory note
Which of the following, if true, strengthens the case that Matheson's acid-test ratio will be above the standard of 1.0?
A) Matheson keeps a low inventory. B) Matheson has high owners' equity. C) Matheson has high liabilities. D) Matheson has a large amount of cash on hand. E) Matheson has a high net income.