Finance Net Present Value and Options Principle Objective

FIN/571 Final Examination Study Guide This study guide will prepare you for the Final Examination you will complete in the final week. It contains practice questions, which are related to each week’s objectives. In addition, refer to each week’s readings and your student guide as study references for the Final Examination. Week One: Foundations of Finance Objective: Discuss 12 principles of foundational corporate finance. 1. __________ occurs when inaccurate information exists. a. 0 The principle of valuable ideas b. 0 Free-rider problem c. 0 Moral hazard d. 0 Adverse selection Objective: Discuss 12 principles of foundational corporate finance. 2. __________ refers to situations wherein the agent can take unseen†¦show more content†¦What is the contribution margin? a. 0 $0.90 b. 0 $1.70 c. 0 $2.50 d. 0 Not enough information Objective: Analyze the effect of price setting on capital budgeting. 12. The wholesale price for Captain John’s is $1.00 per loaf, and the variable cost of production is $0.50 per loaf. Captain John’s expects that expansion will allow them to sell an additional 5 million loaves in the next year. What additional revenues minus expenses will be generated from expansion? a. 0$25,000 b. 0$250,000 c. 0$550,000 d. 0$2,500,000 Objective: Explain the methods, pitfalls, and benefits of capital rationing. 13. Pursuing valuable ideas is the best way to __________. a. 0 achieve extraordinary returns b. 0 get yourself in trouble c. 0 restrain your spending d. 0 avoid risk Objective: Explain the methods, pitfalls, and benefits of capital rationing. 14. Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is __________. a. 0 undervalued b. 0 overvalued c. 0 caught up in a bear market d. 0 being sold by insiders Objective: Create a financial plan. 15. __________ says to forecast the firm’s cash flows, and analyze the incremental cash flows of alternative decisions. a. 0The signaling principle b. 0The time value of money principle c. 0The principle of incremental benefits d. 0The principle of risk-return Objective: Create a financialShow MoreRelatedThe Natural Gas And Oil1425 Words   |  6 Pagesquickening RE installations but are as well incorporating RE into their present set-up to grasp a 100% mix of RE. More than a few countries are innovators in renewable energy. Iceland acquires 85% of the country’s electricity from earth’s hotness. The country’s electricity stock is 100% renewable and relies on geothermal and hydropower. 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