GB 519 Measurement & Decision Making Unit 4 Quiz Answers – Homeworkmade

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GB 519 GB/519 GB519 Unit 4 Quiz (Kaplan)

1. The practice of setting prices below average variable cost and plans to raise prices later to recover the losses from the lower prices, is referred to as
2. When a decision is made in an organization, it is selected from a group of alternative courses of action. The loss associated with choosing the alternative that does not maximize the benefit is the: 
3. The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is:
4. The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is:
5. In a make-or-buy decision:
6. Opportunity costs are: 
7. When the internal rate of return (IRR) method and the net present value (NPV) method do not yield the same recommendation for the same investment project, the technique normally selected is:
8. Under conditions of capital rationing (i.e., limited capital funds are available), the optimal allocation of funds occurs when management uses which one of the following decision models? 
9. Which of the following is an example of a sunk cost in a capital budgeting decision regarding the purchase of new equipment for a profitable business that pays taxes? 
10. Which one of the following is true for the internal rate of return (IRR) method? 
11. Which of the following statements regarding real options is true?
12. The term “breakeven after-tax cash flow” represents:
13. A truck, costing $25,000 and uninsured, was wrecked the very first day it was used. It can either be disposed of for $5,000 cash and be replaced with a similar truck costing $27,000, or rebuilt for $20,000 and be brand new as far as operating characteristics and looks are concerned. The best choice provides a net cost savings of: 
14. GuSont Inc. was considering an investment in the following project:
15. Pique Corporation wants to purchase a new machine for $300,000. Management predicts that the machine can produce sales of $200,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $80,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets. Pique’s combined income tax rate is 40%. Management requires a minimum after-tax rate of return of 10% on all investments.
17. What is the amount of net income (after taxes) in Year 2 of the investment?