Which of the following is the most likely reason for an analyst to choose the direct method rather than the indirect method for analyzing a firms operating cash flows?
A. Toavoidmakingadjustmentsfornon-cashitems
B. Toidentifyoperatingcashflowsbysourceandbyuse
C. Tounderstandtherelationshipbetweennetincomeandoperatingcashflows
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A forward rate agreement (FRA) that expires in 180 days and is based on 90-day LIBOR is quoted at 2.2%. At expiration of the FRA,90-day LIBOR is 2.8%. For a notional principal of USDI,000,000, the pay
A. USD 1,469.31.
B. USD 1,489.57.
C. USD 1,500.O0.
When considering two mutually exclusive capital budgeting projects with conflicting rankings—one has a higher positive net present value (NPV), the other has a higher internal rate of return (IRR)-- t
A. HigherNPV.
B. Shorterpayback.
C. HigherIRR.
A 20-year $1,000 fixed-rate non-callable bond with 8% annual coupons currently sells for $1,105.94. Assuming a 30% marginal tax rate and an additional risk premium for equity relative to debt of 5%, t
A. 13.0%
B. 12.0%
C. 9.9%
A country implements policies that are expected to increase taxes by €100 million, increase government spending by €50 million, and reduce investments and private sector savings by €25 million each. A
A. Increaseby€50million.
B. Decreaseby€50million.
C. Increaseby€100million.