Data on Shin Inc

question 67

Multiple Choice

Data on Shin Inc. for 2008 are shown below, along with the inventory conversion period (ICP) of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its inventory enough to reduce its ICP to the benchmarks' average. If this were done, by how much would inventories decline? Use a 365-day year.

• A) Project S must have a higher NPV than Project L.
• B) If Project S has a positive NPV, Project L must also have a positive NPV.
• C) If the WACC falls, each project's IRR will increase.
• D) If the WACC increases, each project's IRR will decrease.
• E) $11,151

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Definitions:

Forecasting Device

A tool or software used to predict future conditions or trends based on historical and current data analysis.

Phillips Curve

An economic concept that depicts an inverse relationship between the rate of inflation and the rate of unemployment over the short term.

Inflation

The measure at which prices for general goods and services escalate, devaluing the purchasing power.

Structural Unemployment

Unemployment resulting from industrial restructuring, technological changes, or other long-term factors, affecting the structure of the labor market.