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NEW QUESTION: 1
Which of the criteria should be followed to select a process model such as CMMI or ISO?
A. Need for measurable goals and objectives
B. All of the above
C. Need for baseline assessments
D. Applicability of the model to the organization's goals and objectives
E. Management commitment
Answer: B
NEW QUESTION: 2
A new high-priority project is assigned to the project manager with a fully formed budget, deadline, and scope. The project manager is creating the project schedule.
Which of the following calculations accurately shows the critical path?
A. 52 days
B. 49 days
C. 39 days
D. 20 days
Answer: A
NEW QUESTION: 3
Checklists used to assess audit risk have been criticized for all of the following reasons except:
A. Decreasing the uniformity of data acquisition.
B. Being incapable of translating the experience or sound reasoning intended to be captured by each item on the checklist.
C. Inappropriately implying equal weight to each item on the checklist.
D. Providing a false sense of security that all relevant factors are addressed.
Answer: A
NEW QUESTION: 4
Assuming zero taxes, the effect of increasing leverage in the capital structure of a firm is to:
A. Decrease the value of the business as debt is riskier than equity
B. either increase, decrease or leave constant the value of the business depending upon other factors
C. Maintain the value of the business unaltered
D. Increase the value of the business as debt is cheaper than equity
Answer: C
Explanation:
Explanation
The value of a business derives itself from the value of its cash flows, and not its capital structure. However, the availability of tax deductions on debt allow increasing the value of the business to equity holders by using the tax shield.
In the absence of taxes, there is no such advantage. Even if debt is nominally priced lower than the cost of equity, substituting debt for equity makes the remaining equity more risky and increasing the cost of equity to offset any advantage gained from the lower cost of debt. Changing the capital structure does not change the value of the firm, and this in essence is the conclusion of the Modigliani-Miller theorem.