ACC 576 help A Guide to career/uophelp.com ACC 576 help A Guide to career/uophelp.com | Page 46

14.
Alpha Corporation has the following capital structure and
related cost of capital for each source: Which one of the following
is Alpha's weighted average cost of capital?
15.
A company uses its company-wide cost of capital to evaluate
new capital investments. What is the implication of this policy
when the company has multiple operating divisions, each having
unique risk attributes and capital costs?
16.
Which one of the following costs, if any, is relevant in
making financial decisions?
17.
Buff Co. is considering replacing an old machine with a new
machine. Which of the following items is economically relevant to
Buff's decision? (Ignore income tax considerations.)
18.
The ABC Company is trying to decide between keeping an
existing machine and replacing it with a new machine. The old
machine was purchased just two years ago for $50,000 and had an
expected life of 10 years. It now costs $1,000 a month for
maintenance and repairs, due to a mechanical problem. A new
replacement machine is being considered, with a cost of $60,000.
The new machine is more efficient and it will only cost $200 a
month for maintenance and repairs. The new machine has an
expected life of 10 years. In deciding to replace the old machine,
which of the following factors, ignoring income taxes, should
ABC not consider?
19.
Egan Co. owns land that could be developed in the future.
Egan estimates it can sell the land for $1,200,000, net of all selling
costs. If it is not sold, Egan will continue with its plans to develop
the land. As Egan evaluates it options for development or sale of
the property, what type of cost would the potential selling price
represent in Egan's decision?
20.
Which of the following statements is true regarding
opportunity cost?
-------------------------------------------------------------------------------