Question 1

Ordinarily, the most appropriate basis on which to evaluate the performance of a division manager is the division’s

Options :

A : Contribution margin.

B : Net revenue minus controllable division costs.

C : Gross profit

D : Net income minus the division’s fixed costs.

Answer: B

Question 2

The net present value of a proposed investment is negative; therefore, the discount rate used must

be

Options :

A : Greater than the project’s internal rate of return.

B : Less than the project’s internal rate of return.

C : Greater than the firm’s cost of equity.

D : Less than the risk-free rate.

Answer: A

Question 3

The technique that measures the estimated performance of a capital investment by dividing the

project’s annual after4ax net income by the average investment cost is called the

Options :

A : Average rate of return method.

B : Internal rate of return method.

C : Capital asset pricing model.

D : Accounting rate of return method.

Answer: D

Question 4

The expected rate of return for the stock of Cornhusker Enterprises is 20%, with a standard deviation

of 1 5%.The expected rate of return for the stock of Mustang Associates is 10%, with a standard

deviation of 9%.The riskier stock is

Options :

A : Cornhusker because the return is higher.

B : Cornhusker because the standard deviation is higher.

C : Mustang because the standard deviation is higher.

D : Mustang because the coefficient of variation is higher.

Answer: D

Question 5

Using the information collected, the organization should focus on the

Options :

A : Total number of personal computer complaints that occurred.

B : Number of computer complaints associated with CD problems and new software usage.

C : Number of computer complaints associated with the lack of user knowledge and hardware problems.

D : Costs to alleviate all computer complaints.

Answer: C