The Following Information Pertains to Wolfe Company

question 4

Multiple Choice

The following information pertains to Wolfe Company

-If invested capital is defined as total assets, a project earning an ROI of 12 percent should be

• A) accepted.
• B) rejected.
• C) rejected if the cost of capital is greater than 12 percent.
• D) rejected if the desired rate of return is less than 12 percent.

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Definitions:

Indirect Method

A technique for preparing cash flow statements where net income is adjusted for changes in balance sheet accounts to reflect cash inflows and outflows.

Financing Activity

Transactions involving changes in equity and long-term liabilities reflecting how a company raises and repays capital.

Consolidated Statement of Cash Flows

A financial statement that presents the total cash inflows and outflows of a parent company and its subsidiaries.

Non-Voting

Shares in a company that do not grant the shareholder the right to vote on corporate matters.