1.Companies use ____ in capital budgeting project analysis because ________. a-
ID: 2753161 • Letter: 1
Question
1.Companies use ____ in capital budgeting project analysis because ________. a- accounting profit; that is the total net income; b- after tax cash flow; that is what the owners would receive from the project and reinvest; c- accounting profit; that is what the owners would receive from the project and reinvest; d- after tax cash flow; that is the result of prudent accounting.
2. When borrowing money, you want to know the ____ interest rate because ____.a- nominal; it is the easiest to find; b- effective; it is the true cost of borrowing; c- risk free; that is what the government pays; d- funds; that is what you would pay the bank.
3. Cash available to pay out to the investors after the firm pays for new investments or additions to working capital is _____. a- a statement of cash flows; b- operating after tax cash flow; c- free cash flow; d- net income
4. An organization that raises money from investors and provides financing for individuals and businesses is a ___. a- factor; b- federal government regulatory unit; c- state government taxing authority; d- financial intermediary
5. In finance, 1 Point is ____ and Points are used by lenders to _____. a- a clause in the loan agreement; make loans more affordable for the borrower; b- used on a simple interest loan; improve the loan process; c- one percent; make more profit for the lender.
Explanation / Answer
1)
b) after tax cash flow as this source of good estimate of available money
re invest
2)
effective interest rate , as the power of compound comes into play , so if they coated nominal interest rate and but underlying clause that compounding every day , then thats a huge interest payment
3)
free cash flow , which can be used to re invest
4)
financial intermediary , thats the their business wing
5)
1p oint is equal to 1 percent interest and yes as it is the interest to be paid to lender, he benifits
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