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Test bank for Fundamentals of Corporate Finance 10th
Canadian Edition by Ross Westerfield
Corporate Finance (Harvard University)




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Chapter 01 - Introduction to Corporate Finance
Chapter 01
Introduction to Corporate Finance




True / False Questions


1. In capital budgeting, the financial manager tries to identify investment opportunities that
are worth more to the firm than they cost to acquire.
TRUE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions



2. The size, timing and risk of cash flows are important when evaluating a capital budgeting
decision.
TRUE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions



3. A capital expenditure project becomes desirable when the project is worth more to the firm
than the cost to acquire it.
TRUE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions




1-1

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Chapter 01 - Introduction to Corporate Finance

4. A capital expenditure project becomes desirable when the value of the cash flow generated
by the project exceeds the project's cost.
TRUE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions



5. Capital structure determines the least expensive sources of funds for the firm to borrow.
TRUE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions



6. Capital structure determines how much debt the firm should have in relation to its level of
equity.
TRUE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions



7. Capital structure determines the level of current assets that is required to maintain the firm's
operational level.
FALSE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions




1-2

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All chapter download @ qidiantiku.com

Chapter 01 - Introduction to Corporate Finance

8. Capital structure determines how much risk is associated with the future cash flows of a
project.
FALSE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions



9. Determining when a supplier should be paid is a capital structure decision.
FALSE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions



10. Establishing the accounts receivable policies is a capital structure decision.
FALSE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions



11. Determining the amount of money to borrow to finance a 10-year project is a capital
structure decision.
TRUE


Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager.
Topic: 01-04 Financial Management Decisions




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