1.The cash flows from operating activities section of the statement of cash flows considers

1. 1. interest expense.
2. 2. dividends paid.
3. 3. taxes paid.
4. 4. labor expense.

2.Once sales are forecasted, ________ must be generated to estimate a variety of operating costs.

1. 1. a production plan
2. 2. an operating budget
3. 3. a pro forma statement
4. 4. a cash budget

3.Under MACRS, an asset which originally cost $10,000 is being depreciated using a 5-year normal recovery period. What is the depreciation expense in year 3?

1. 1. $1,500
2. 2. $1,200
3. 3. $1,900
4. 4. $2,100

4.A corporation

1. 1. must use different (than for tax purposes), but strictly mandated, depreciation methods for financial reporting purposes.
2. 2. must use the same depreciation method for tax and financial reporting purposes.
3. 3. may use different depreciation methods for tax and financial reporting purposes.
4. 4. must use different depreciation methods for tax and financial reporting purposes.

5.A generous philanthropist plans to make a one-time endowment to a renowned heart research center which would provide the facility with $250,000 per year into perpetuity. The rate of interest is expected to be 8 percent for all future time periods. How large must the endowment be?

1. 1. $2,314,814
2. 2. $2,000,000
3. 3. $3,000,000
4. 4. $3,125,000

6.The present value of an ordinary annuity of $2,350 each year for eight years, assuming an opportunity cost of 11 percent, is

1. 1. $27,869.
2. 2. $ 1,020.
3. 3. $12,093.
4. 4. $18,800.

7.Dan plans to fund his individual retirement account (IRA) with the maximum contribution of $2,000 at the end of each year for the next 10 years. If Dan can earn 10 percent on his contributions, how much will he have at the end of the tenth year?

1. 1. $51,880
2. 2. $20,000
3. 3. $31,874
4. 4. $12,290