The primary test of feasibility in a reorganization is whether the firm's fixed charges after reorganization can be covered by its projected cash flows. One of the actions that can be taken in bankruptcy under the standard of feasibility is to replace existing management with a new team if the quality of management is judged to have been substandard.

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Collen VonLv2

2 Jul 2018

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[1] The explicit costs, such as the legal expenses, associated with corporate default are classified as _____ costs.
[A] beta conversion
[B] direct bankruptcy
[C] indirect bankruptcy

[2] An indirect cost of bankruptcy is the loss of key employees.
[A] True
[B] False

[3] A legal attempt to financially restructure a failing firm so that it can continue operating as a going concern is called a reorganization.
[A] True
[B] False

[4] The optimal capital structure has been achieved when the:
[A] weight of equity is equal to the weight of debt.
[B] debt-to-equity ratio selected results in the lowest possible weighted average cost of capital.
[C] cost of equity is maximized.

[5] The optimal capital structure will tend to include more debt for firms with:
[A] less taxable income.
[B] lower probability of financial distress.
[C] substantial tax shields from other sources.

[6] The optimal capital structure of a firm:
[A] will remain constant over time unless the firm makes an acquisition.
[B] will be the same for all firms in the same industry.
[C] will vary over time as taxes and market conditions change.

[7] In a world with corporate taxes, MM theory implies that that all firms should choose an all-debt capital structure.
[A] True
[B] False

[8] A firm is technically insolvent when:
[A] the value of its stock declines by more than 50 percent in any given 12-month period.
[B] the value of the firm's assets is less than the value of the firm's liabilities.
[C] it is unable to meet its financial obligations.

[9] Which one of the following statements is correct concerning a Chapter 7 bankruptcy?
[A] A firm reorganizes its operations in an effort to return to being a viable concern.
[B] A trustee will assume control of the firm's assets until those assets can be liquidated.

[10] If the net present value of a project is positive (non-zero), then the project's internal rate of return will exceed its required rate of return.
[A] True
[B] False

[11] Which one of these methods uses accounting values rather than financial values?
[A] AAR
[B] IRR
[C] NPV

[12] An investment should be accepted if the NPV is positive and rejected if it is negative.
[A] True
[B] False

[13] The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the:
[A] net present value.
[B] payback period.
[C] internal rate of return.

[14] An investment is acceptable if its average accounting return (AAR):
[A] exceeds the target AAR.
[B] is less than the target AAR.

[15] The discount rate that makes the net present value of an investment exactly equal to zero is called the internal rate of return.
[A] True
[B] False

[16] The most valuable investment given up if an alternative investment is chosen is referred to as a(n):
[A] sunk cost.
[B] opportunity cost.
[C] erosion cost.

[17] The cost of test marketing a product prior to deciding whether or not to produce the product is a sunk cost.
[A] True
[B] False

[18] An asset will be depreciated faster using MACRS rather than the straight-line method.
[A] True
[B] False

[19] The financial break-even point determines which one of these values?
[A] Fixed costs
[B] Variable cost per unit
[C] Sales quantity

[20] The return earned in an average year over a multi-year period is called the _____ average return.
[A] arithmetic
[B] standard
[C] geometric

[21] The capital gains yield plus the dividend yield on a security is called the:
[A] geometric return.
[B] total return.
[C] variance of returns.

[22] Which one of the following is an example of a nondiversifiable risk?
[A] A poorly managed firm suddenly goes out of business due to lack of sales
[B] A key employee of a firm suddenly resigns and accepts employment with a key competitor
[C] A well respected chairman of the Federal Reserve suddenly resigns

[23] Beta values are highly dependent on the covariance of a security with the market.
[A] True
[B] False

[24] Insider trading does not offer any advantages if the financial markets are:
[A] inefficient.
[B] semiweak form efficient.
[C] strong form efficient.

[25] MM Propositions ignore bankruptcy costs.
[A] True
[B] False

blushspider431

âA firm has been paying a print shop $18,500 annually to print the companyâs monthly newsletter. The agreement with this print shop has now expired, but it could be renewed for a further five years. The new subcontracting charges are expected to be 12% higher than they were under the previous contract. The company is also considering the purchase of a desktop publishing system with a high-quality laser printer. With appropriate text and graphics software, the newsletter can be composed and printed in near-typeset quality. A special device is also required to print photos in the newsletter. The following estimates have been quoted by a computer vendor: Personal computer $4,500 Colour laser printer 6,500 Photo device/scanner 5,000 Software 2,500 Total cost basis 18,500 Annual O&M costs 10,000 The salvage value of each piece of equipment at the end of five years is expected to be only 10% of the original cost. The companyâs marginal tax rate is 35%, and the desktop publishing system can be considered a Class 45 property with a CCA rate of 45%.

a) Determine the projected net after-tax cash flows for the investment.

b) Compute the IRR for this project.

c) Is the project justifiable at MARR = 13%?â

ultramarinetermite786

Q1. Members are most likely to experience role conflict and divided loyalties in:
a. a cross-functional project team
b. a self-managed operational team
c. a traditional work team
d. an executive team

Q2. Which of the following was not mentioned as a primary determinant of performance for a functional team?
a. how long the current leader has been in that position
b. trust and cooperation among the team members
c. the organization and coordination of activities
d. member agreement about objectives and strategies

Q3. Which is not likely to improve the effectiveness of a self-managed team?
a. let members share in financial gains from improved performance
b. change the membership frequently to give the team fresh ideas
c. provide accurate, timely information relevant to team activities
d. give members training in interpersonal and problem solving skills

Q4. Which process is most likely to occur in an after-activity review?
a. determination of responsibility for errors and mistakes
b. recognition of members for their contributions to the team
c. analysis of what was done well and what needs to be changed
d. selection of the most qualified team leader for the next activity

Q5. Which type of activity is least likely to be delegated to a self-managed team?
a. evaluating each team member's task performance
b. firing a team member who has unsatisfactory performance
c. determining the work procedures to be used by the team
d. determining which team member will carry out each task

Q6. The primary responsibility of the leader of a decision group is to:
a. suggest good ideas for solving the problem
b. ensure that everybody has equal influence
c. encourage group members to reach an agreement quickly
d. structure the discussion in a systematic manner

Q7. The primary purpose of a dialogue session is to:
a. debate competing proposals and identify the best one for the team
b. help members learn more about each other's interests and aspirations
c. encourage members to express their dissatisfaction with each other openly
d. increase understanding of implicit assumptions and mental models

Q8. What was found in research on the effectiveness of self-managed teams?
a. productivity and quality improved substantially
b. organizational commitment usually increased
c. turnover and absenteeism were lower
d. the results were inconsistent across studies

Q9. Which condition is least important for the success of a new strategy?
a. it is based on the core competencies of the organization
b. it is compatible with significant changes in the external environment
c. it has a few clear themes relevant to the shared values of the members
d. it is similar to a strategy that was previously successful

Q10. Which of the following actions by the CEO is not likely to improve the effectiveness of an executive team?
a. clearly define objectives consistent with shared values of team members
b. talk with individuals whenever possible to reduce time in meetings
c. give the team considerable discretion but specify limits of team authority
d. rely more on advice from members with the most expertise

Q11. Which statement about institutionalization in organizations is most accurate?
a. it describes how subunits with expertise gain power in organizations
b. it makes it easier for organizations to adapt to a changing environment
c. it describes how people use power to gain more power
d. it demonstrates why political tactics are unnecessary to maintain power

Q12. What is the best summary of findings in research on leadership succession?
a. chief executives have little influence on organization performance due to the overwhelming influence of economic and market conditions
b. chief executives have a strong impact on organization performance and are the primary determinant of whether the organization prospers or declines
c. chief executives have a moderate impact on organizational performance when measured over a period of several years
d. chief executives influence stock prices but have little or no influence on the firm's actual economic performance

Q13. What pattern of behavior is least likely during the first few months on the job for the new CEO in an organization that is prosperous?
a. the CEO will quickly select a new strategy and make major changes in the organization to look like a confident and dynamic leader
b. the CEO will make changes in the functional areas in which he or she has the most prior experience
c. the CEO will attempt to demonstrate some small successes in dealing with immediate problems to build a favorable image and gain more discretion
d. the CEO will gather and analyze information about the organization and environment in order to determine an appropriate strategy

Q14. Which of the following was not given as a guideline for external monitoring?
a. examine a wide range of developments and trends in the environment
b. make an extra effort to learn what clients and customers want and need
c. identify both the strengths and weaknesses of competing products
d. rely primarily on your own intuition to analyze the environment

Q15. In what situation are executive teams least likely to be useful?
a. the organization includes several business units with diverse products
b. there is intense competition among executives to become the next CEO
c. the organization has a complex and turbulent environment
d. the executives in the team have very diverse backgrounds and perspectives

Q16. Which is not a core performance determinant in the flexible leadership theory?
a. process reliability and efficiency
b. leader experience and technical skills
c. human resources and relations
d. innovation and adaptation

Q17. Research at CCL indicates that the least amount of learning occurred for managers who had:
a. assignments for which they were well prepared
b. challenges they had to face alone
c. opportunities to make mistakes
d. diverse experiences with different types of challenges

Q18. Which statement about leadership development in organizations is least likely to be accurate:
a. leadership development should be consistent with organization strategy
b. developmental activities should be coordinated with formal training
c. self development activities should be maximized to reduce costs
d. leadership development should be integrated with succession planning

Q19. Which of the following usually includes a mix of formal training and learning from experience working on management projects?
a. mentoring
b. job rotation programs
c. action learning
d. behavior modeling

Q20. Which developmental method is most useful for helping managers to understand their inner feelings and values?
a. outdoor challenge programs
b. personal growth programs
c. mentoring programs
d. multisource feedback workshops

Q21. Which approach is used most often for improving leadership?
a. multi-source feedback workshops
b. formal mentoring programs
c. job rotation programs
d. formal training programs

Q22. What two methods are most useful for improving conceptual skills?
a. case analysis and behavior role modeling
b. feedback workshops and simulations
c. simulations and case analysis
d. behavior role modeling and feedback workshops

Q23. In most feedback workshops for management development, the primary source of information about a manager's behavior is:
a. other managers in the workshop who fill out a checklist
b. observers who record the person's behavior during a simulation
c. observation of a videotape taken of the manager doing regular work
d. questionnaires filled out by people with whom the manager works

Q24. Training programs to enhance leadership skills:
a. are widely used for managers in organizations
b. are seldom used for effective managers
c. are used mostly for department supervisors
d. are used mostly for top executives in large organizations

Q25. Which is least likely to be a reason for the "glass ceiling" in large organizations?
a. differences in leadership behavior displayed by men and women
b. implicit theories about the attributes required for effective leadership
c. popular stereotypes about the skills and traits of men and women
d. less encouragement and developmental opportunities for women

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