Which of the Following Is False

question 22

Multiple Choice

Which of the following is false?

• A) It is usually assumed that, at the end of a projects life, additional working capital will no longer be required and will become a cash inflow
• B) Installation costs are not relevant for the purposes of investment appraisal
• C) The scrap value of machinery to be replaced should be included in an investment appraisal
• D) The amount of corporation tax to be paid should be included in an investment appraisal

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Definitions:

Equity Multiplier

A financial ratio indicating the proportion of a company's assets that are financed by stockholders’ equity, showing the level of financial leverage.

Earnings Per Share

A company's net profit divided by the number of its outstanding shares, indicating the profitability per share.

Price-Earnings Ratio

A financial metric used to evaluate a company's share price relative to its earnings per share, helping investors assess the market value of a stock.

Times Interest Earned

is a financial ratio that compares a company's income before interest and taxes (EBIT) to its interest expenses, indicating how well the company can cover its interest obligations.