Q1. Which of the following can be expected to create value immediately and uncon

Question

Q1.

Which of the following can be expected to create value immediately and unconditionally?

I. Selling underperforming assets at more than their present value
II. Investing in additional research and development leading to a patent
III. Increasing the amount of financial leverage being carried by the firm.

Select one:

A. I only

B. I and II only

C. I and III only

D. II and III only

E. I, II, and III

F. None of the above

Q2.

Which of the following statements concerning existing projects is true?An existing project should be:
I. Continued when its continuing value is greater than both its liquidation and divestiture value.
II. Liquidated when its liquidation value is greater than its divestiture value.
III. Divested when its divestiture value is greater than both its continuing value and its liquidation value.

Select one:

a.  I only

b. II only

c. I and II only

d.  I and III only

e.  II and III only

f.  I, II, and III

Explanation / Answer

Answer 1. Selling underperforming assets at more than their present value and investing in additional research and development leading to a patent are to create value immediately and unconditionally.

Selling underperforming assets will off load the burden on the company and free its assets.

Investing in additional research and development leading to a patent will create value for the company.

Please post other questions separately. Thanks.

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