A project has an initial cost of $31,300 and a three-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is $1,750, $2,100, and $1,700 per year for the next three years, respectively. What is the average accounting return?

If a firm experiences _____, it makes sense to offer a longer credit period to customers.

In actual practice, managers most frequently use which two types of investment criteria?

Watson Landscaping is considering a project that will require additional inventory of $12,000 and will increase accounts payable by $19,000. Accounts receivable is currently $302,000 and is expected to increase by 5 percent if this project is accepted. What is the project’s initial cash flow for net working capital?

What is the expected return on a portfolio that is invested 22 percent in Stock A, 36 percent in Stock B, and the remainder in Stock C? State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom .05 .18 .11 .13 Normal .92 .09 .08 .06 Bust .03 −.07 −.05 −.14

Project A has cash flows of –$74,900, $18,400, $26,300, and $57,100 for Years 0 to 3, respectively. Project B has cash flows of –$79,000, $18,400, $22,700, and $51,500 for Years 0 to 3, respectively. Both projects are independent, have multiple noncash expenses, and use straight-line depreciation to a zero balance over the project’s life. Neither project has any salvage value. Both projects have a required accounting return of 11.5 percent. Should you accept or reject these projects based on the average accounting return?

The Green Fiddle is considering a project with sales of $86,800 a year for the next four years. The profit margin is 6 percent, the project cost is $97,500, and depreciation is straight-line to a zero book value over the life of the project. The required accounting return is 10.8 percent. This project should be _____ because the AAR is _____ percent.

A stock has annual returns of 5 percent, 21 percent, −12 percent, 7 percent, and 6 percent for the past five years. The arithmetic average of these returns is _____ percent while the geometric average return for the period is _____ percent.

Your portfolio is comprised of 22 percent of Stock X, 32 percent of Stock Y, and 46 percent of Stock Z. Stock X has a beta of 1.04, Stock Y has a beta of .96, and Stock Z has a beta of 1.24. What is the beta of your portfolio?

Webster’s has sales of $798,000 and a profit margin of 6.8 percent. The annual depreciation expense is $82,600. What is the amount of the operating cash flow if the company has no long-term debt?