International Financial Management 2nd Edition-Test Bankchapter 15

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1、InternationalFinancialManagement,2e(Bekaert/Hodrick)Chapter15InternationalCapitalBudgeting15.1MultipleChoiceEasy1)Thebasicprincipalofcapitalbudgetingisthat________withapositiveadjustednetpresentvalueshouldbeacceptedbythefirm.A)projectsB)investmentsC)allcashflowsD)accountsreceivableAnswer:AC

2、omment:AnOverviewofAdjustedNetPresentValue,p.5552)Ifprojectsaremutuallyexclusive,theprojectwiththe________shouldbeacceptedbythefirm.A)lowestANPVB)highestANPVC)highestreturnD)lowesttaxburdenAnswer:BComment:AnOverviewofAdjustedNetPresentValue,p.5553)ThefirststepinderivinganANPVforaprojectisto

3、A)addthenetpresentvalueoffinancialsideeffects.B)addthepresentvalueofanygrowthoptions.C)calculatethenetpresentvalueoftheproject'scashflows.D)determinetheterminalvalueoftheproject.Answer:CComment:Step1:DiscounttheCashFlowsoftheAll-EquityFirm,p.5564)Whendiscountingcashflows,itisimportantthaton

4、lythe________,after-taxcashflowsbeused.A)monthlyB)annualC)incrementalD)totalAnswer:CComment:Step1:DiscounttheCashFlowsoftheAll-EquityFirm,p.5565)________istheamountofinventoryandcashthatthefirmmusthaveonhandtorunitsbusiness.A)CapitalexpenditureB)FreecashflowC)NetworkingcapitalD)Incrementalc

5、ashflowAnswer:CComment:DerivingtheNPVofFreeCashFlow,p.5577Copyright©2012PearsonEducation,Inc.6)Whenafirm'smanagementchoosesnottopayoutdividendsfromitsfreecashflow,itdevelops________thatmayleadtohighagencycosts.A)negativenetpresentvalueB)additionaldepreciationC)nomoregrowthoptionsD)financial

6、slackAnswer:DComment:DerivingtheNPVofFreeCashFlow,p.5587)Onefeeinvestmentbankersearnisbasedonthe________thatisthedifferencebetweenwhatthebanker'scorporateclientreceivesfromtheissueofsecuritiesandwhatthepublicpays.A)underwritingdiscountB)bid-askspreadC)freecashflowsD)netpresentvalueoftheclie

7、ntfirmAnswer:AComment:TheCostofIssuingSecurities,p.5628)Whatisthetermusedtorefertotheabilityofthefirmtodeductinterestpaymentstoreduceitstaxliability?A)taxcreditsB)interesttaxshieldC)interestloopholeD)taxforgivenessAnswer:BComment:TaxShieldsforCertainSecu