Which of the following statements regarding discounted payback (DPB) is/are not true?
Multiple Choice
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It ignores any cash flows that accrue after the project reaches its respective payback benchmark.
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Is a capital budgeting method that generates decision rules and associated metrics that choose projects based on how quickly they return their initial investment plus interest.
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both a and b are not true.
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none of the above.
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Which of the following will increase the operating cycle?
Multiple Choice
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The cash cycle decreases by one day but the average payment period increases by two and a half days.
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The days’ sales in inventory decreases by one day but the average collection period increases by two days.
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COGS stays the same but inventory increases.
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All of these choices are correct.
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Which of the following is NOT a fundamental factor ignored by the target cash balance models?
Multiple Choice
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Firms have the option to borrow short-term to meet unexpected demands for cash.
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The costs and delays of trading securities have fallen dramatically since the advent of the Internet.
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Many large firms habitually use all or the majority of their available cash to purchase overnight securities.
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Models take into account that many firms must keep compensating balances in their deposit accounts as part of borrowing agreements with their banks.
