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Exam (elaborations)

FIN370 Questions and Answers (100% Pass)

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  • Module
  • Fin 370
  • Institution
  • Fin 370

In pro forma analysis, what determines whether or not an account on the balance sheet or income statement is relevant to a project? The projected causes an account to change, then it is revelant. 2. How can you determine if a cash flow is incremental to a project? The cash flow will disappea...

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  • October 22, 2024
  • 23
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • Fin 370
  • Fin 370
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1|Page | © copyright 2024/2025 | Grade A+




FIN370 Questions and Answers
(100% Pass)
1. In pro forma analysis, what determines whether or not an account on the

balance sheet or income statement is relevant to a project?


✓ The projected causes an account to change, then it is revelant.




2. How can you determine if a cash flow is incremental to a project?


✓ The cash flow will disappear when the project ceases

✓ The cash flow changes only when a new project is implemented

✓ The cash flow occurs only if a new project is implemented




3. What is an opportunity cost?


✓ The value of the next best alternative use of a resource owned or

employed by a firm.




4. Which one of these represents an opportunity cost?


✓ Assigning a current employee to a new project




5. Which of these illustrates a complementary effect? Select all that apply.




Master01 | October, 2024/2025 | Latest update

, 1|Page | © copyright 2024/2025 | Grade A+

✓ A new product increases traffic flow thereby increasing the revenue

generated by a firm's existing products.

✓ A new product increases the sales of the firm's existing products.




6. What types of cost are included in an asset's depreciable basis? Select all

that apply?


✓ Sales tax and freight charges

✓ Purchase price of the asset

✓ Installation and testing costs




7. Which one of these computes the amount of annual depreciation using the

straight-line method? Ignore the half-year convention.


✓ (Depreciable basis - Ending book value) / Life of asset




8. A firm purchased a new machine costing $28,000 including sales tax. It

also paid $2000 for delivery and installation. The machine has a life of 6 years

and an expected ending book value of $5000. How the depreciation is

computed using the straight-line method? Ignore the half year convention.


✓ ($28000 + $2000 - $5000) / 6




Master01 | October, 2024/2025 | Latest update

, 1|Page | © copyright 2024/2025 | Grade A+

9. Which one of these is a correct formula for OCF, assuming there is no

interest expense?


✓ Net income + depreciation




10. Manor's purchases some equipment in preparation for a new project.

Which of these are time zero cash flows for that project? Select all that apply


✓ Purchase price of the equipment

✓ Installation and initial testing costs

✓ Shipping costs to have the equipment delivered




11. What types of activities related to a project's fixed assets can create a

cash flow for the final year of a project? Select all that apply.


✓ Selling the project's equipment

✓ Scrapping equipment that has a positive book value but no market

value

✓ Trading in the projects' equipment on new equipment for other

projects.




12. How is the gain or loss on a sale of equipment determined?


✓ Gain (loss) = Market Value - Book Value




Master01 | October, 2024/2025 | Latest update

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