TEST BANK - Fundamentals of Corporate
Finance: 2024 Release ISE Paperback by
Randolph Westerfield
COMPLETE CHAPTERS| VERIFIED
QUESTIONS WITH ACCURAT E SOLUTIONS
ALL ANSWERS ARE AT THE END OF EACH
CHAPTER
Ar
ch
Do
c
Page | 1
, Chapter 1: Introduction to Corporate Finance
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) The size, timing and risk of cash flows are important when evaluating a capital budgeting decision.
⊚ true
⊚ false
2) A capital expenditure project becomes desirable when the project is worth more to the firm than the cost to
acquire it.
⊚ true
⊚ false
3) A capital expenditure project becomes desirable when the present value of the cash flow generated by the
project exceeds the project's present value of cost.
⊚ true
Ar
⊚ false
ch
4) Optimal capital structure determines the least expensive sources of funds for the firm to borrow.
Do
⊚ true
c
⊚ false
5) Optimal capital structure determines how much debt the firm should have in relation to its level of equity.
⊚ true
⊚ false
6) Capital structure determines the level of current assets that is required to maintain the firm's operations.
⊚ true
⊚ false
7) Capital structure determines how much risk is associated with the future cash flows of a project.
⊚ true
Page | 2
,⊚ false
8) Determining when a supplier should be paid is a capital structure decision.
⊚ true
⊚ false
9) Establishing the accounts receivable policies is a capital structure decision.
⊚ true
⊚ false
10) Determining the amount of money to borrow to finance a 10-year project is a capital structure decision.
⊚ true
⊚ false
Ar
ch
11) Deciding if a new project should be accepted is a working capital decision.
⊚ true
Do
⊚ false
c
12) When evaluating a project in which a firm might invest, the size but not the timing of the cash flows is
important.
⊚ true
⊚ false
13) Working capital management addresses the firm's appropriate level of inventory.
⊚ true
⊚ false
14) Common stockholders or limited partners can lose, at most, what they have invested in a firm.
⊚ true
⊚ false
Page | 3
, 15) Partnership income is treated as personal income of the partners.
⊚ true
⊚ false
16) A limited partner can lose his or her investment in the partnership.
⊚ true
⊚ false
17) Maximization of the current earnings of the firm is the main goal of the financial manager.
⊚ true
⊚ false
Ar
18) The primary goal of a financial manager should be to maximize the value of shares issued to new
investors in the corporation.
ch
⊚ true
Do
⊚ false
c
19) The primary goal of financial management is to minimize the corporate tax liability.
⊚ true
⊚ false
20) Control of the firm ultimately rests with board of directors. They elect the management, who, in turn, lead
the company.
⊚ true
⊚ false
21) The goal of financial managers does not imply that illegal or unethical actions should be taken in the hope
of increasing the value of the firm.
⊚ true
⊚ false
Page | 4
Finance: 2024 Release ISE Paperback by
Randolph Westerfield
COMPLETE CHAPTERS| VERIFIED
QUESTIONS WITH ACCURAT E SOLUTIONS
ALL ANSWERS ARE AT THE END OF EACH
CHAPTER
Ar
ch
Do
c
Page | 1
, Chapter 1: Introduction to Corporate Finance
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) The size, timing and risk of cash flows are important when evaluating a capital budgeting decision.
⊚ true
⊚ false
2) A capital expenditure project becomes desirable when the project is worth more to the firm than the cost to
acquire it.
⊚ true
⊚ false
3) A capital expenditure project becomes desirable when the present value of the cash flow generated by the
project exceeds the project's present value of cost.
⊚ true
Ar
⊚ false
ch
4) Optimal capital structure determines the least expensive sources of funds for the firm to borrow.
Do
⊚ true
c
⊚ false
5) Optimal capital structure determines how much debt the firm should have in relation to its level of equity.
⊚ true
⊚ false
6) Capital structure determines the level of current assets that is required to maintain the firm's operations.
⊚ true
⊚ false
7) Capital structure determines how much risk is associated with the future cash flows of a project.
⊚ true
Page | 2
,⊚ false
8) Determining when a supplier should be paid is a capital structure decision.
⊚ true
⊚ false
9) Establishing the accounts receivable policies is a capital structure decision.
⊚ true
⊚ false
10) Determining the amount of money to borrow to finance a 10-year project is a capital structure decision.
⊚ true
⊚ false
Ar
ch
11) Deciding if a new project should be accepted is a working capital decision.
⊚ true
Do
⊚ false
c
12) When evaluating a project in which a firm might invest, the size but not the timing of the cash flows is
important.
⊚ true
⊚ false
13) Working capital management addresses the firm's appropriate level of inventory.
⊚ true
⊚ false
14) Common stockholders or limited partners can lose, at most, what they have invested in a firm.
⊚ true
⊚ false
Page | 3
, 15) Partnership income is treated as personal income of the partners.
⊚ true
⊚ false
16) A limited partner can lose his or her investment in the partnership.
⊚ true
⊚ false
17) Maximization of the current earnings of the firm is the main goal of the financial manager.
⊚ true
⊚ false
Ar
18) The primary goal of a financial manager should be to maximize the value of shares issued to new
investors in the corporation.
ch
⊚ true
Do
⊚ false
c
19) The primary goal of financial management is to minimize the corporate tax liability.
⊚ true
⊚ false
20) Control of the firm ultimately rests with board of directors. They elect the management, who, in turn, lead
the company.
⊚ true
⊚ false
21) The goal of financial managers does not imply that illegal or unethical actions should be taken in the hope
of increasing the value of the firm.
⊚ true
⊚ false
Page | 4
