solution

Which of the following statements regarding discounted payback (DPB) is/are not true?

Multiple Choice

• It ignores any cash flows that accrue after the project reaches its respective payback benchmark.

  Save your time - order a paper!

  Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

  Order Paper Now

• Is a capital budgeting method that generates decision rules and associated metrics that choose projects based on how quickly they return their initial investment plus interest.

• both a and b are not true.

• none of the above.

• Which of the following will increase the operating cycle?

  Multiple Choice

• The cash cycle decreases by one day but the average payment period increases by two and a half days.

• The days’ sales in inventory decreases by one day but the average collection period increases by two days.

• COGS stays the same but inventory increases.

• All of these choices are correct.

• Which of the following is NOT a fundamental factor ignored by the target cash balance models?

  Multiple Choice

• Firms have the option to borrow short-term to meet unexpected demands for cash.

• The costs and delays of trading securities have fallen dramatically since the advent of the Internet.

• Many large firms habitually use all or the majority of their available cash to purchase overnight securities.

• Models take into account that many firms must keep compensating balances in their deposit accounts as part of borrowing agreements with their banks.