BEC REVIEW B

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Joens1313
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BEC REVIEW B
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2015-11-09 23:22:53
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BEC REVIEW B
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  1. -------------------------- is current assets minus current liabilities.
    Working capital is current assets minus current liabilities.
  2. The cost of financing (hurdle or discount rate) is often determined through the use of the ----------------------------------------------- of debt and equity financing.
    The cost of financing (hurdle or discount rate) is often determined through the use of the weighted average cost of capital of debt and equity financing.
  3. The----------------------------------------- is often determined through the use of the weighted average cost of capital of debt and equity financing.
    The cost of financing (hurdle or discount rate) is often determined through the use of the weighted average cost of capital of debt and equity financing.
  4. ------------------------------- is the method used to determine the rate of return that causes the present value of the net cash flows to equal the initial investment.
    Internal rate of return (IRR) is the method used to determine the rate of return that causes the present value of the net cash flows to equal the initial investment.
  5. Internal rate of return (IRR) is the method used to determine the --------------------- that causes the present value of the net cash flows to equal the initial investment.
    Internal rate of return (IRR) is the method used to determine the rate of return that causes the present value of the net cash flows to equal the initial investment.
  6. Treasury bonds have maturities of -------------- years.
    Treasury bonds have maturities of 10–30 years.
  7. A -------------------- is a government issue with a longer maturity than a T-bill or a Treasury note
    A Treasury bond is a government issue with a longer maturity than a T-bill or a Treasury note
  8. The ------------------------------------------------------------- is the average rate that a company pays its investors for the use of their funds after adjustments for taxes.
    The weighted average cost of capital (WACC) is the average rate that a company pays its investors for the use of their funds after adjustments for taxes.
  9. What is the weighted average cost of capital?
    The weighted average cost of capital (WACC) is the average rate that a company pays its investors for the use of their funds after adjustments for taxes.
  10. Information related to the financial transactions for a country is given as follows with values stated in billions of dollars.    


    --  Gross domestic product (GDP)            $4,000    


    --  Transfer payments                          500    


    --  Corporate income taxes                      50    


    --  Social Security contributions              200    --  


    Indirect business taxes                    210    


    --  Personal income taxes                      250    


    --  Undistributed corporate profits             25    


    --  Depreciation                                         500    


    --  Net income earned abroad for the country     0



    Disposable income is:
    $3,265.

    Disposable income is that income received by individuals which is available for consumption and saving (i.e., personal income minus personal income taxes). The example below demonstrates the calculation of disposable income:       

    Gross domestic product (GDP)                       $4,000    


    -  


    Depreciation                                         (500)                                                          


    -------    


    =  Net domestic product (NDP)(at mkt cost)            $3,500 -  Indirect business taxes  (210)                                                          



    -------    =  Net national income (NNI) (at factor cost)$3,290    -  Corporate income taxes ( 50)    -  Undistributed corporate profits( 25)  


    -  Social Security contributions  (200)    +  Transfer payments 500                                                                  




    -------    =  PERSONAL INCOME  $3,515 -  Personal income taxes (250)                                                          


    ------- =  DISPOSABLE INCOME $3,265



                                                              =======
  11. ------------------------------ is that income received by individuals which is available for consumption and saving
    Disposable income is that income received by individuals which is available for consumption and saving
  12. what is disposable income?
    Disposable income is that income received by individuals which is available for consumption and saving
  13. -------------------------------------- is the quantity of inventory that should be ordered at one time in order to minimize the associated costs of carrying and ordering inventory, such as purchase-order processing, transportation, and insurance.
    Economic order quantity (EOQ) is the quantity of inventory that should be ordered at one time in order to minimize the associated costs of carrying and ordering inventory, such as purchase-order processing, transportation, and insurance.
  14. What is the Economic Order Quantity?
    Economic order quantity (EOQ) is the quantity of inventory that should be ordered at one time in order to minimize the associated costs of carrying and ordering inventory, such as purchase-order processing, transportation, and insurance.
  15. ------------------------------- are designed to answer two basic questions:

    What quantity of an item should be ordered (or produced)?

    How often should an item be ordered (or produced)?
    Inventory decision models are designed to answer two basic questions:

    What quantity of an item should be ordered (or produced)?

    How often should an item be ordered (or produced)?
  16. Inventory decision models are designed to answer two basic questions:

    ---------------------------------------

    -----------------------------------------
    Inventory decision models are designed to answer two basic questions:

    What quantity of an item should be ordered (or produced)?

    How often should an item be ordered (or produced)?
  17. -------------------------- is the additional quantity of inventory held to cover periods in which demand or order lead-time is greater than normal.
    Safety stock (SS) is the additional quantity of inventory held to cover periods in which demand or order lead-time is greater than normal.
  18. what is safety stock?
    Safety stock (SS) is the additional quantity of inventory held to cover periods in which demand or order lead-time is greater than normal.
  19. Asta, Inc., is a medical laboratory that performs tests for physicians. Asta anticipates performing between 5,000 and 12,000 tests during the month of April. Compared to industry averages, at the low range of activity Asta has a lower sales price per test, higher fixed costs, and the same breakeven point in number of tests performed. At the high range of activity, Asta’s sales price per test and fixed costs are the same as industry averages, and Asta’s variable costs are lower. At the low range of activity (0 to 4,999 tests performed) fixed costs are $160,000. At the high range of activity (5,000 to 14,999 tests performed) fixed costs are $200,000.  Sales price per test       $60   Variable costs per test     20


    What is Asta’s breakeven point in number of tests at the low activity range?
    4,000

    The contribution margin per test is sales price less variable cost, or $40 ($60 - $20).


    At low activity with fixed costs of $160,000, the breakeven point is fixed costs divided by unit contribution margin, or $160,000 ÷ $40 = 4,000 tests

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