Which of the following items would be considered a relevant cash flow for capital budgeting purposes?

• A.Intangible and qualitative factors
• B.Incremental investment in working capital as the sales revenue increases
• C.Fixed operating expenses that will be incurred no matter which alternative is chosen
• D.Research expenses incurred during the previous three years

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The media discovers that an automobile manufacturer has been secretly polluting the rivers near its plants. After this discovery, the government imposes a punitive fee on the company, and a group of consumers begins to boycott the manufacturer. What will be the total effect of these simultaneous events?

• A.The equilibrium price of cars from this manufacturer will decrease.
• B.The change in equilibrium quantity of cars purchased from this manufacturer cannot be determined.
• C.The equilibrium quantity of cars purchased from this manufacturer will decrease.
• D.The equilibrium price of cars from this manufacturer will increase.

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An earthquake destroys a major manufacturing plant that produces sneakers. The manufacturing plant for rubber, a complementary good to sneakers, is unaffected by the earthquake. What is the result?

• A.The equilibrium quantity for both products decreases.
• B.The equilibrium quantity of sneakers increases, and the equilibrium quantity of rubber decreases.
• C.The equilibrium quantity of sneakers decreases, and the equilibrium quantity of rubber increases.
• D.The equilibrium quantity for both products remains the same.

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A group of season ticket holders wants to forecast attendance at National Football League (NFL) games for the upcoming season. One ticket holder argues that using the population of the United States as the only independent variable would explain as much as using both the United States population and the percent change in disposable income (per capita) as independent variables. Another ticket holder argues that using the percent change in disposable income (per capita) asthe only independent variable would provide the most accurate forecast. Listed below are the Adjusted R2 values for three regression models. Based on these values, and keeping in mind that the ticket holders are only concerned about forecasting, what is the correct conclusion?
- NFL Attendance vs. US Population and Percent Change in Disposable Income.
Adjusted R2= 0.8964 - NFL Attendance vs. US Population: Adjusted R2= 0.8609 - NFL Attendance vs. Percent Change in Disposable Income. Adjusted R2= -0.0244

• A.The Adjusted R2 of NFL Attendance vs. Percent Change in Disposable Income is negative, so Percent Change in Disposable Income should be excluded from any regression model.
• B.The Adjusted R2 of NFL Attendance vs. US Population and Percent Change in Disposable Income is higher than that of either single variable regression model, so both US Population and Percent Change in Disposable Income should be included in the regression model.
• C.There is not any information regarding the p-values of the independent variables, so it is impossible to determine the explanatory power of the regression models.
• D.The Adjusted R2 of NFL Attendance vs. US Population is higher than that of NFL Attendance vs. Percent Change in Disposable Income, so US Population should be the only independent variable in the regression model.

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A company had sales revenue of $500,000 for 2013. During 2013, the company incurred operating expenses of $40,000 and interest expenses of $60,000. The income before taxes was $220,000. What was Cost of Goods Sold (COGS) for the year 2013?

• A.$240,000
• B.$220,000
• C.$180,000
• D.$200,000

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