10. (TCO 5) Which of the following statements is false regarding the cost of capital? (Points : 4) The cost of capital should consider the flotation costs. All other being equal, it is preferable to use market value weights than book value weights. The WACC is the most appropriate discount rate for all projects. Should include the cost of retained earnings. 11. (TCO 2) Which of the following increases the cash account? (Points : 4) Goods are sold on credit An interest payment on a notes payable is made A payment due is received from a client Raw materials are purchased and paid for with credit 12. (TCO 2) Which of the following statements is true? (Points : 4) The optimal credit policy minimizes the total cost of granting credit. Firms should avoid offering credit at all cost. An increase in a firm's average collection period generally indicates that an increased number of customers are taking advantage of the cash discount. Character, refers to the ability of a firm to meet its credit obligations out its operating cash flows. The optimal credit policy, is the policy that produces the largest amount of sales for a firm. 13. (TCO 2) All else constant, a decrease in the accounts receivable period will: (Points : 4) lengthen the accounts payable period. shorten the inventory period. lengthen the operating cycle. shorten the cash cycle. shorten the accounts payable period. 14. (TCO 2) Delphinia's has the following estimated quarterly sales for next year. The accounts receivable period is 30 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days. Q1 Q2 Q3 Q4 Sales $1,800 $1,700 $2,100 $1,900 (Points : 4) $567 $600 $821 $1,134 $1,200
10. (TCO 5) Which of the following statements is false regarding the cost of capital? (Points : 4) The cost of capital should consider the flotation costs. All other being equal, it is preferable to use market value weights than book value weights. The WACC is the most appropriate discount rate for all projects. Should include the cost of retained earnings. 11. (TCO 2) Which of the following increases the cash account? (Points : 4) Goods are sold on credit An interest payment on a notes payable is made A payment due is received from a client Raw materials are purchased and paid for with credit 12. (TCO 2) Which of the following statements is true? (Points : 4) The optimal credit policy minimizes the total cost of granting credit. Firms should avoid offering credit at all cost. An increase in a firm's average collection period generally indicates that an increased number of customers are taking advantage of the cash discount. Character, refers to the ability of a firm to meet its credit obligations out its operating cash flows. The optimal credit policy, is the policy that produces the largest amount of sales for a firm. 13. (TCO 2) All else constant, a decrease in the accounts receivable period will: (Points : 4) lengthen the accounts payable period. shorten the inventory period. lengthen the operating cycle. shorten the cash cycle. shorten the accounts payable period. 14. (TCO 2) Delphinia's has the following estimated quarterly sales for next year. The accounts receivable period is 30 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days. Q1 Q2 Q3 Q4 Sales $1,800 $1,700 $2,100 $1,900 (Points : 4) $567 $600 $821 $1,134 $1,200
