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NEW QUESTION: 1
Norine Benson is studying for the Level 1 CFA examination and is having difficulty with the broader concepts of capital budgeting. Her study partner, Henri Manz, tests her understanding by asking her to identify which of the following statements is TRUE?
A. Replacement decisions involve mutually exclusive projects.
B. For mutually exclusive projects, the decision rule is to pick the project that has the highest net present value (NPV).
C. An analyst can ignore inflation since price level expectations are built into the weighted average cost of capital (WACC).
D. If the change in current liabilities is greater than the change in current assets, it means that additional financing was needed and there is a cash outflow.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
Because replacement decisions involve either keeping the old asset or replacing the old asset, the projects are mutually exclusive.
The decision rule for NPV is to pick the project with the highest positive NPV. Only projects with positive NPV add to the company's value. If a neither project has a positive NPV, neither project should be chosen.
The statement about net working capital (NWC) is stated in the reverse of how we usually think of it:ꢀin NWC =ꢀCurrent Assets -ꢀCurrent Liabilities. Here, the change in current liabilities exceeds the change in current assets and the result is negative, meaning the project frees up cash, creating a cash inflow.
Because the WACC is adjusted for inflation, the analyst must adjust project cash flows upward to reflect inflation. If the cash flows are not adjusted for inflation, the NPV will be biased downward. (Reverse the preceding logic for deflation.)
NEW QUESTION: 2
You are implementing Cloud Procurement contracts and during user acceptance testing, the user would like to create clauses in the Cloud applications similar to what were available in their legacy Contract application.
Identify two ways to create clauses as per their requirement. (Choose two.)
A. Import Clauses from the Contracts workarea page.
B. Create Clauses from the Contracts workarea page.
C. Manage Contract Standard Clauses, Templates, and Profiles from Functional Setup Manager.
D. Manage Contract Standard Clauses from Functional Setup Manager.
Answer: A,D
NEW QUESTION: 3
Which statement best describes the warranty on HP laser supplies?
A. HP offers 6 months of warranty for all HP laser supplies.
B. No warranty is applicable to HP laser supplies.
C. HP offers a warranty that is defined by local legislation, which varies from 6 to 24 months.
D. As long as the printer is not indicating the end of life of the cartridge, the warranty covers defects from materials and workmanship.
Answer: D
Explanation:
Reference: http://welcome.hp.com/country/us/en/privacy/limited_warranty.html (see the first few bulleted points on the page)
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