Questions from Financial Accounting

Q: Discounting a future cash flow at 15 percent results in a lower

Discounting a future cash flow at 15 percent results in a lower present value than does discounting the same cash flow at 10 percent. Explain why.

Q: Discounting cash flows takes into consideration one characteristic of the earnings stream

Discounting cash flows takes into consideration one characteristic of the earnings stream that is ignored in the computation of return on average investment. What is this characteristic and why is it...

Q: What nonfinancial considerations should be taken into account regarding a proposal to

What nonfinancial considerations should be taken into account regarding a proposal to install a fire sprinkler system in a finished goods warehouse?

Q: Minor Company is authorized to sell 1,200,000 shares

Minor Company is authorized to sell 1,200,000 shares of $10 par value common stock and 60,000 shares of $100 par value 6 percent preferred stock. As of the end of the current year, the company has act...

Q: Tootsie Roll Industries has two business segments, one for operations in

Tootsie Roll Industries has two business segments, one for operations in the United States and one for operations in Mexico and Canada. The following information (in thousands) comes from a recent ann...

Q: The present value of an investment depends on the timing of its

The present value of an investment depends on the timing of its future cash flows. Explain what this statement means by giving a specific example of two investments that have significant timing differ...

Q: What factors might a company consider in establishing a minimum required return

What factors might a company consider in establishing a minimum required return on an investment proposal?

Q: A particular investment proposal has a payback period that exceeds the investment’s

A particular investment proposal has a payback period that exceeds the investment’s expected life. The investment has no salvage value. Will this proposal’s net present value be positive or negative?...

Q: Which accounts appear in a company’s after-closing trial balance?

Which accounts appear in a company’s after-closing trial balance? How do these accounts differ from those reported in an adjusted trial balance?

Q: Can a company be profitable but not liquid? Explain.

Can a company be profitable but not liquid? Explain.