CORe Practice Exam Tests Latest Updated on Oct-2021
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NEW QUESTION 49
A company buys a machine for $175,000. The machine will be depreciated on straight-line basis over a 10-year period with salvage value of $25,000. The company expects the machine to generate after-tax net cash inflows of $30,000 in each of the 10 years. At the end of the 10 years, the machine is expected to be sold for $25,000. The discount rate is eight percent.
What is the net present value?
- A. $26,300
- B. $51,300
- C. $37,875
- D. $212,875
Answer: C
NEW QUESTION 50
A company provided the following information on its financial statements for 2013: What is the company's accounts receivable turnover ratio for 2013?
- A. 3.36
- B. 2.88
- C. 2.06
- D. 2.40
Answer: B
NEW QUESTION 51
When a company declares and pays dividends to its shareholders, which of the following options is affected?
- A. Current ratio
- B. Gross profit margin
- C. Accounts receivable turnover
- D. Interest coverage ratio
Answer: A
NEW QUESTION 52
Which of the following transactions represents an owner's equity transaction for a company?
- A. A repurchase of a company's own stock
- B. An in-kind payment for services received
- C. A purchase of a building paid in cash
- D. The purchase of shares in a company that's also a supplier
Answer: A
NEW QUESTION 53
A professor asks a class of 100 students to spend the weekend sampling the heights of adults. After each student samples 30 adults, the student is then asked to calculate the mean of his or her sample. As the professor collects the individual sample results from each student, which of the options below is the MOST likely to be observed?
- A. As more samples are collected, the average of the sample means increases but will not converge to the true population mean.
- B. As more samples are collected, the average of the sample means decreases but will not converge to the true population mean.
- C. As more samples are collected, the sample means will converge to the true population mean.
- D. As more samples are collected, the sample means may vary but the average of the sample means will converge to the true population mean.
Answer: D
NEW QUESTION 54
Which of the following methods for valuing and expensing inventory is NOT allowed under the International Financial Reporting Standards (IFRS)?
- A. First In First Out (FIFO)
- B. Standard Cost
- C. Weighted Average
- D. Last In First Out (LIFO)
Answer: D
NEW QUESTION 55
An apparel company is negotiating a new contract with one of its fabric suppliers. Under which of the following conditions will the apparel company have power to bargain for a lower price in the negotiations?
- A. If the apparel industry is growing quickly
- B. If the supplier has several competitors and only a few customers
- C. If quality of its fabric is important to the apparel company
- D. If the apparel company's employees would need training to use a new supplier's materials
Answer: B
NEW QUESTION 56
A local tourism board wants the city government to set a maximum price that taxis can charge, in order to make the city more attractive to tourists. What might be a result of this price cap?
- A. The quality of taxis will improve.
- B. Local residents will begin to use taxis more frequently.
- C. Total welfare (consumer surplus + producer surplus) will increase.
- D. The number of taxis will decrease.
Answer: D
NEW QUESTION 57
Which of the following options would MOST likely be considered a variable cost?
- A. The loan payment for a new machine at a manufacturing company
- B. The monthly salary of a manager at a telecommunications company
- C. The hourly wage of a student mowing lawns for a landscaping company
- D. A license to serve alcohol for a new restaurant
Answer: C
NEW QUESTION 58
Which of the following activities will NOT cause total assets to increase?
- A. Raising $200,000 by issuing new shares of common stock
- B. Paying a $300,000 insurance expense for the next three years
- C. Purchasing a piece of equipment for $100,000 on credit
- D. Borrowing $200,000 from a local bank
Answer: B
NEW QUESTION 59
After thorough market research, a company discovers that there are three well-defined customer segments for a new product it plans to release. Customer segment A represents young professionals, who each have a willingness to pay (WTP) of $45. Customer segment B represents college students, who each have a WTP of $25. Customer segment C represents mid-career professionals, who each have a WTP of $100. What price should the company charge for its new product in order to maximize revenues? Assume that each customer segment has the same number of individual customers.
- A. $70
- B. $25
- C. $100
- D. $45
Answer: C
Explanation:
NEW QUESTION 60
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A student is interested in which factors affect the U.S. poverty rate and develops a model using the following independent variables:
The unemployment rate The percent of the adult (over 25) population with at least a bachelor's degree The percent of the population without health insurance
The student collects data from each of the 50 states in the U.S. and Washington D.C. for the year 2012 and runs the regression in Excel. The results of this regression are given below. Based on these results, what does the model predict the poverty rate would be for a state for which the unemployment rate is 6%, 20% of all adults over 25 have at least a bachelor's degree, and 5% of the population does not have health insurance?
(Note that all percent values are given as numbers between 0 and 1.)
- A. 1.14%
- B. 14.14%
- C. 26.48%
- D. 1.27%
Answer: B
NEW QUESTION 61
A college bookstore sells textbooks at a 15 percent discount to professors while successfully selling the same books at full price to students. What conditions are present so that the bookstore can charge different prices? (Select all that apply.)
- A. Professors are unable to resell books.
- B. The bookstore has few close competitors.
- C. The books can also be purchased online.
- D. The bookstore is owned by the college where it sells books.
- E. The demand for the books is elastic.
Answer: A,B
NEW QUESTION 62
Why would an entrepreneur want to operate a mobile food truck instead of a restaurant?
- A. In the long-run restaurants make zero economic profit.
- B. A mobile food truck has lower fixed costs than a restaurant.
- C. A mobile food truck invites a wider variety of customers than a restaurant.
- D. In the short-run restaurants make zero economic profit.
Answer: B
NEW QUESTION 63
Two years ago, the purchasing manager at a company spent $25,000 on a new machine that would improve production efficiency at the company. The manufacturers of the machine release an updated model that costs $35,000 and that promises to further improve production efficiency. Under what conditions should the purchasing manager upgrade to the new model?
- A. If the efficiency improvements from the old machine did not result in enough savings to offset the $25,000 purchase price
- B. If the savings from the additional efficiency improvements are large enough to offset the $10,000 difference in price between the machines
- C. If the savings from the additional efficiency improvements are large enough to offset the $60,000 spent on machines
- D. If the savings from the additional efficiency improvements are large enough to offset the $35,000 cost of the new machine
Answer: D
NEW QUESTION 64
Many people argue that giving patents for medicines is unfair, because it prevents many people from accessing the products they need to live a healthy life. Why do governments allow patents for medicines?
- A. Governments hope to earn tax revenues on monopoly profits.
- B. Patents increase consumers' willingness to pay for medicines.
- C. Patents help promote innovation through easier recovery of fixed costs.
- D. Patents protect consumers from counterfeit medicines.
Answer: C
NEW QUESTION 65
A company's Balance Sheet for the year ended Dec. 31, 2013 is as follows:
(In millions)
The company is MOST likely in which of the following industries?
- A. Civil aviation
- B. Commercial banking
- C. Pharmaceutical
- D. Retailing
Answer: D
NEW QUESTION 66
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