Questions from Financial Accounting

Q: What can be said about an investment proposal that has a net

What can be said about an investment proposal that has a net present value of zero?

Q: The manager of the Fleet division of Potlatch Automotive is evaluated on

The manager of the Fleet division of Potlatch Automotive is evaluated on her division’s return on investment and residual income. The company requires that all divisions generate a minimum return on i...

Q: Ashton Company was experiencing financial difficulty late in the current year.

Ashton Company was experiencing financial difficulty late in the current year. The company’s income was sluggish, and the market price of its common stock was tumbling. On December 21, the company beg...

Q: Depreciation expense does not require payment in cash. However, it

Depreciation expense does not require payment in cash. However, it is an important consideration in the discounting of an investment’s future cash flows. Explain why.

Q: What steps can a firm take to ensure that employee estimates of

What steps can a firm take to ensure that employee estimates of the costs, revenue, and cash flows from a proposed capital investment are not overly optimistic or pessimistic?

Q: What are some types of capital investment projects in which nonfinancial factors

What are some types of capital investment projects in which nonfinancial factors may outweigh financial factors?

Q: Why is it important to consider income tax consequences when deciding whether

Why is it important to consider income tax consequences when deciding whether to replace an asset?

Q: Identify some conditions where upper management might allow some divisions to have

Identify some conditions where upper management might allow some divisions to have a lower required rate of return.

Q: What is the major shortcoming of using the payback period as the

What is the major shortcoming of using the payback period as the only criterion in making capital budgeting decisions?

Q: What is a liquidating dividend, and how does it relate to

What is a liquidating dividend, and how does it relate to a regular (no liquidating) dividend?