NOTE: These Multiple Choice Questions Require Present Value Information

question 23

Multiple Choice

NOTE: These multiple choice questions require present value information. Rudolph Corporation manufactures Christmas decorations and supplies throughout the world. The company owns property, plant, and equipment and also enters into operating leases for certain facilities. Assume that Randolph's incremental borrowing rate is 8%. The company's tax rate is 40%. Listed below is selected financial data for Rudolph and a portion of the company's operating lease footnote.
Assuming that Rudolph Corporation was required to capitalize its operating lease how would the company's fixed asset ratio change under this assumption.

• A) increase
• B) decrease
• C) no effect
• D) unable to determine

---

Definitions:

Framingham Study

A long-term ongoing cardiovascular study on the residents of Framingham, Massachusetts that has contributed significantly to the understanding of heart disease.

Commonly Accepted Practice

A procedure or method widely regarded and adopted by professionals within a particular field as appropriate or effective.

Mammography

A diagnostic technique using X-rays to detect abnormalities in the breast tissue, such as tumors or cysts.

Research Process

The systematic investigation into and study of materials and sources to establish facts and reach new conclusions.