Corporate Finance Berk 3rd Edition Test Bank
Corporate Finance Berk 3rd Edition Test Bank
Corporate Finance Berk 3rd Edition Test Bank
2) Which of the following organization forms for a business does NOT avoid double taxation?
A) Limited partnership
B) "C" corporation
C) "S" corporation
D) Limited liability company
Answer: B
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual
3) Which of the following organization forms accounts for the most revenue?
A) "S" corporation
B) Limited partnership
C) "C" corporation
D) Limited liability company
Answer: C
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual
1
Copyright © 2014 Pearson Education, Inc.
2
Copyright © 2014 Pearson Education, Inc.
5) Which of the following is NOT an advantage of a sole proprietorship?
A) Single taxation
B) Ease of setup
C) Limited liability
D) No separation of ownership and control
Answer: C
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual
3
Copyright © 2014 Pearson Education, Inc.
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for the layers to work apart. A pneumatic tire should always be pumped as
hard as possible, so that it stands up practically round under a loaded car.
While the car will ride a little harder under these conditions than when the
tires are soft, there will be greater resistance to punctures, and the life of the
tires will be increased. The normal wear to a tire should give it a smooth
surface, but if it is noticed that the tread is rough and uneven, it may be
taken for granted that the wheels do not run true. Rear wheels will be
thrown out of true by the springing or bending of the axle, and front wheels
also from this cause, but more probably from faulty adjustment of the
steering mechanism or the bending of the drag link or steering arms.
The grip of the tire on the road is much affected by the nature of the
surface, the traction on dry macadam being much greater than on wet
asphalt. When the pull of the engine on the wheel exceeds the grip of the
tire on the road, there will be a slip, and the wheel will revolve without
moving the car. This will wear the tread of the tire far more rapidly than
will ordinary running. The better the traction of the tires on the road
surface, the less will be the tendency of the car to skid or slide sideways,
and less power will be lost through the slipping of the wheels. To reduce the
chance of slipping, because of wet asphalt or muddy roads, various devices
are in use, all of which encircle the tread of the tire, and present a rough
surface. The form in most general use consists of chains that fit across the
tread, these being detachable and used only in case of necessity. While it is
often done, it is nevertheless bad practice to apply chains or other antiskid
devices to only one of the rear wheels instead of to both, for it increases the
diameter of the wheel and makes a difference in the resistance against the
wheel, causing the differential to operate at all times. The differential is not
constructed to operate steadily, and will wear rapidly if forced to do so.
SPRINGS
F . 48.—A, Full elliptic spring; B, half elliptic spring.
In addition to tires, an automobile is fitted with springs, which are
necessary to absorb the shocks and jolts that are too great to be taken up by
the tires. These are usually full or half elliptic (Fig. 48), and made of flat
plates, or leaves, of different lengths, the small being placed on the large,
and all bound together at the center. The combined action of the springs and
tires permits the frame and body of the car to move in a nearly straight line,
while the wheels and axles follow the inequalities of the road. When springs
break, as is frequently the case, it is from the rebound of the body that
results when the wheels drop into a deep hole, the upward movement
separating the leaves, and the entire strain coming on the long leaves alone.
To prevent this, shock absorbers are recommended, which permit the
springs to have a certain amount of action, but check them if they tend to
expand or compress to too great an extent. They act either by the friction
between metal plates and washers, or by air or oil in a cylinder that permits
a piston to move freely to a certain degree, but presents resistance to a
greater motion. Shock absorbers are placed between the axles and frame,
and there should be four, two to each axle.
DISTANCE RODS
As the springs are placed between the axles and body and are flexible, it
is necessary to provide some method of preventing an obstruction in the
road from twisting the axle, as might result if one wheel struck heavy sand
or a stone while its mate was on good surface. A twist of this sort would
throw the axle out of line with the drive and bind the chain or driving shaft.
F . 49.—D R R .
To prevent this, radius or distance rods are attached to the axle, one on
each side, extending to a point well forward on the frame (Fig. 49). These
rods are pivoted to the frame, and have a loose joint on the axle, so that the
latter is free to move up and down, but prevented from moving forward or
back. Distance rods are adjustable, and on chain-driven cars serve to adjust
the chains, which are tightened by lengthening the rods and slackened by
shortening them.
CHAPTER XI
TROUBLES
P ractice and experience are the best instructors in keeping the car
running, and the operator quickly acquires the ability to recognize the
source of trouble from the action of the engine in failing to deliver power,
or from the manner in which it stops. Each part of the mechanism may be
counted on to give trouble, and the possibilities are numerous, but in
general it may be said that an interference with the proper operation of the
engine may be laid to the failure of the ignition system or gasoline supply, a
defect of the combustion space in not retaining the pressure, or the
overheating of the engine.
IGNITION TROUBLES
The ignition system is the greatest producer of trouble, and the reason is
usually difficult to locate. Any interference with the flow of the current, or
leaks by which it evades passing over the entire circuit, will cause irregular
running or the stopping of the engine, and the circuit must be maintained in
the best possible condition in order to prevent these as much as possible.
The wires should be well insulated, the insulation of the secondary circuit
being heavier than that of the primary because of the higher pressure of the
current that must be retained. The constant vibration to which the wires are
subjected requires the use of cable composed of a number of strands of fine
wire rather than a single heavy wire, for the latter is much more liable to be
broken; but in securing the end of a cable under a nut, great care must be
exercised that all of the strands are bound. A single strand is hardly
noticeable, but if it comes into contact with uninsulated metal, it will permit
the current to leak. In making connections, the best plan is to solder the end
of the cable to a copper or brass terminal which holds the strands secure,
and gives a firm bearing for the nut. Before making connections the
terminals should be scraped bright, and after running the nuts down firmly,
covered with vaseline to prevent corrosion. Corrosion of copper or brass
produces a greenish deposit (copper sulphate) which is an insulator, and
when it forms between the terminals of the conductor it produces high
resistance, cutting down or even preventing the flow of current. A worse
effect of corrosion is to bind the nuts on the screws, preventing their
removal. A loose connection presents resistance to the flow of current, and
the current will flow irregularly, as the vibrations bring the terminals
together or separate them. A wire broken at a terminal is easily seen, but
when a break occurs inside of the insulation, it is more difficult to detect.
When a broken wire is suspected, its circuit may be located by testing, and
new wires laid, one length at a time, until the faulty one is replaced. It is
poor economy to use cheap wire, for the best is none too good for the hard
use to which it is put. The wearing away of insulation by chafing will
produce a short circuit, and the wires should be prevented from coming into
contact with any part of the car or engine in such a manner as to give this
result.
THE BATTERY
When a battery is exhausted, or nearly so, it will not magnetize the core
of the coil sufficiently to induce a current that will give a strong enough
spark to ignite the mixture. The length of time that a battery should last, or
the mileage that it should give, is learned from experience, and when it is
exhausted in less time there is evidence that it has either been short-
circuited or that the current has been used too extravagantly.
The extra source of current that should be provided should not be
switched into circuit until the short circuit that exhausted the regular source
has been located and removed, or there will be a further waste of current. It
occasionally happens that through carelessness the battery is so connected
that one of the cells is reversed, in which case the current will be reduced
by the loss of the current from two cells, for the energy of the reversed cell
will neutralize that of another. If both sets of battery have become
exhausted by short circuit, current for further running may be obtained by
connecting the two sets together in multiple, supposing that each set is, as is
usual, connected in series.
An apparently exhausted dry battery will recuperate, or pick up, if
allowed to stand, but a storage battery that shows 1.8 volts or less for each
cell should be immediately recharged, for further use will cause fatal injury.
THE MAGNETO
THE COIL
There is always a small spark between the vibrator contacts of a coil, and
in time the platinum will be burned and corroded, the oxide that forms
being an insulator and preventing the flow of the current. In such a case the
points may be smoothed with a fine flat file and polished on a strip of
leather, or if too far gone for this, may be renewed by soldering a short
length of platinum wire to the adjusting screw and a plate of the same metal
to the blade. While this job is a delicate one, it is not beyond the range of a
careful amateur.
When the insulation of the coil or condenser breaks down, as may result
from overwork or long use, it should be returned to the maker, for the
construction of a coil is exceedingly delicate, and repairs on it require
expert workmanship. It is not advisable to take the coil apart in any way,
beyond the vibrator parts, for inexperienced handling may injure it beyond
repair.
The spark plug is a frequent source of trouble, for the insulation may
break down, or a carbon deposit may form between the points, either fault
permitting the current to pass without jumping the gap. Plugs should be so
made that when the parts are screwed together the strain will not come
against the insulation. Porcelain insulation is brittle, and may be cracked
inside the sleeve, the damage not showing on handling and inspection, but
being sufficient to permit the spark to pass inside of the sleeve instead of
between the points. Mica insulation is usually formed of a large number of
washers squeezed together under great pressure, but the action of the heat
and the presence of oil will frequently cause the layers to separate,
permitting a short circuit.
The carbon deposit that fouls and short-circuits spark plugs results from a
rich mixture, or overlubrication, and this should be prevented by proper
adjustments. Under the intense heat the carbon bakes hard, and can be
removed only by scraping or by the action of strong ammonia or gasoline.
As in scraping the smooth surface of the insulation may be scratched
(which would give a rough surface to which a fresh carbon deposit would
cling more tightly), the removal of the deposit by ammonia or gasoline,
applied with a stiff brush, is recommended.
The points between which the spark passes should be about one thirty-
second of an inch apart. After long use, the corrosion due to the heat of the
spark will increase this distance, when the points should be bent together.
The high compression through which the spark is required to pass presents
greater resistance than air at atmospheric pressure, practically in proportion
to the pressure, and a current that will produce a spark outside of the
cylinder may not have sufficient pressure to give a like result when the
engine is running. If the pressure of the compression is four times that of
the atmosphere, the current should be able to produce a spark four thirty-
seconds, or one eighth, of an inch long outside of the cylinder, and for
safety this should be increased four-fold.
THE IGNITER
The stationary point of the igniter is carried on the end of a screw that
passes through the cylinder head or wall, and by means of this screw its
position in relation to the moving point may be altered as desired. The
distance between the points when they are separated should be about one
sixteenth of an inch; more than this will result in the formation of a longer
spark between them, and as the passage of the spark through the high
resistance of the compressed charge will produce great heat, the igniter
points will be burned and corroded more than need be. The adjustment may
be made by loosening the lock nut on the stationary point, and running the
screw down until the stationary point is in contact with the movable when
the latter is acted on by the cam. The lock nut should be run down until it
bears lightly against the cylinder and the point then unscrewed, the lock nut
being carried with it, until the latter is about one sixteenth of an inch away
from the cylinder. This gives a corresponding distance between the igniter
points, and running the lock nut down firmly will secure it.
The tappet spring should be of considerable strength in order to snap the
movable point from the stationary when the tappet ceases to act. Too great
strength will bring the movable point against the stationary with such force
that the platinum plate that it carries will be battered out of place. The
principal difficulty that is encountered is the corrosion of these points, the
flow of the current being decreased or stopped by the insulating film that
covers them. The blow with which the two come together tends to knock
this off and to keep the surfaces flat, but when they become badly worn and
pitted they must be filed smooth.
The bearing in the cylinder wall in which the movable point rocks is
made after the manner of a valve; the opening must be tight in order to
prevent the leakage of compression, but sufficiently free to move as the cam
acts on the tappet. This joint cannot be lubricated with oil because of the
heat, and the two parts must therefore be kept as smooth as possible. To
attain this result they are ground together as engine valves are ground.
THE TIMER
The spring that keeps the revolving part of a timer in contact with the
stationary part must be of sufficient strength to squeeze out the vaseline
with which the timer is packed, as otherwise the grease will form an
insulating film between them, preventing the flow of the current. The timer
must be securely attached to its shaft, for if it is loose the contacts will be
made at the wrong time, and the sparks will not occur in the combustion
space at the correct intervals. All of its parts and connections should be as
firm as possible. The rods with which the stationary part is connected to the
control lever on the steering column should be provided with adjustments
by which lost motion due to wear may be taken up. There are usually
several joints in these rods, all of which may wear loose, and if there are no
means by which they may be kept tight, the lever will move a considerable
distance before the timer will respond. It is often possible to remedy this by
placing coil springs in such positions that they take up the lost motion. A
timer should be so set on the half-time shaft that the revolving contact is
just touching the stationary contact when the piston is at its highest point in
the cylinder on the compression stroke, the control lever being in nearly its
most retarded position.
As dirt will interfere with the action of a timer, the cover should always
be in place and tightly secured.
THE SWITCH
Loose switch parts will prevent the flow of the current or give a vibrating
contact, and should be frequently looked after. If the switch is mounted on
metal, as is occasionally the case, a loosening of the parts or the wearing of
the insulation will result in a short circuit that is difficult to locate because
the good condition of the switch is usually taken for granted.
GASOLINE TROUBLES
THE TANK
The tank of a gravity feed system is always provided with a small hole or
vent, usually drilled through the filling cap, through which air may enter to
replace the gasoline that is drawn off in the running of the engine. If this
hole becomes plugged with dirt, the escape of the gasoline will reduce the
pressure in the tank to such an extent that further flow will be prevented,
and the engine will stop with all of the symptoms of a lack of gasoline. On
opening the tank for the purpose of investigation, the air supply will be
renewed, and the engine will again run, to stop slowly as before. Clearing
the hole will relieve the condition. This vent may also cause trouble in
permitting water to enter and contaminate the gasoline, this being liable to
happen when the car is washed.
The pipe by which the gasoline flows from the tank to the carburetor
should project slightly above the bottom of the tank, to prevent sediment
from being drawn into it.
As gasoline rots rubber rapidly, hose should never be used to conduct it,
nor should joints be packed with rubber. Copper and brass are attacked by
gasoline less than other metals, and should always be used in preference to
iron, which is corroded by the liquid. Joints may be made tight by the use of
shellac or soap.
THE CARBURETOR
COMPRESSION TROUBLES
COOLING TROUBLES
The failing of the cooling or lubrication systems will permit the engine to
heat, and if continued will produce disastrous results. The radiator of a
water-cooled engine should begin to heat shortly after the engine has
started, and will rapidly become warm all over, thus showing that the water
is circulating properly. A failure of the circulation may be due to a clogged
pump or passage, and the cause should be located and removed without
delay. Dirt in the water is the most usual cause of the failure of the pump,
and also of the stopping of the circulation in the gravity system. A strainer
should be fitted to the filling cap of the radiator to remove bits of wood,
leaves, sand, etc. The connections of the water system are frequently made
of rubber hose, and this in rotting will free bits of rubber that will prevent
the flow. A difficulty occurring at the clamps that attach the hose to the
metal pipes is the tearing off of a strip of the rubber lining, which closes the
passage after the manner of a valve.
The fan must be kept running correctly, and if belt-driven, the belt must
be kept tight and the pulleys free from oil that would permit slipping.
Water that has been heated freezes much more readily than water that has
not, and therefore the water system of an automobile must be carefully
guarded against low temperatures. A freeze of the water may crack the
water jackets or split the radiator, either of which will require the laying up
of the car for repairs. The best protection is to draw off the water if there is
the slightest danger of freezing, drain cocks being provided at the low
points of the system for this purpose. If this is not practicable, a solution of
four pounds of calcium chloride to the gallon of water, mixed hot and
allowed to cool, may be used, and it will stand a temperature of 15° F.
below zero without freezing.
The flanges or corresponding parts of an air-cooled motor should be kept
clean, for dirt will prevent the free radiation of heat.
A lack of lubricating oil, either through the failure of the supply or the
clogging of the pipes, will cause the engine to heat and the piston to stick or
seize. When the car is new, it is better to supply too much oil than too little,
but when the bearings have smoothed down the supply may be reduced.
The operation of the engine is the only indication as to whether it is
receiving a proper amount of oil, and rather than run the risk of
underlubricating the piston rings and cylinder walls, it is better to have
enough to produce a faint smoke at the exhaust pipe. This will show that the
engine is receiving a little more than is necessary. Too much oil in the
cylinder will foul the spark plug, and as this would prevent the passing of
the spark, it is to be as much avoided as too little.
When the lubricator pipes are clogged, the easiest method of clearing out
the obstruction is to force air through them by means of a foot pump.
CHAPTER XII
LOCATING TROUBLE
MAKE-AND-BREAK IGNITION
JUMP-SPARK IGNITION
In testing an engine fitted with the jump-spark ignition system, the circuit
should be closed and the crank shaft revolved twice, attention being paid to
the sound of the vibrators. On a four-cylinder engine, the timer makes four
contacts in two revolutions of the crank shaft, and if all of the vibrators are
heard it is proof that the primary circuit is in good condition, and not the
seat of the trouble. If only one of the vibrators buzzes, the battery circuit
may be considered to be working properly, for otherwise no current could
have passed to the coil box. The trouble may then be identified as being in
part if not altogether in the adjustment of the vibrators of the dead coils,
their connections with the timer, or in the timer itself. One end of a short
piece of wire should be touched to the timer binding post of one of the dead
coils, and the other to any metal part of the engine, the lubricator, for
instance, to form a short circuit through the primary circuit with the
exception of the timer and its connections. If the vibrator buzzes, the
trouble is not in the coil, but in that part of the circuit cut out by the short-
circuiting wire. The same piece of wire may be used to bridge across to any
metal part of the engine from the binding post on the timer at which the
wire from the coil is connected, and if the wire from the coil to the timer is
in good condition, the vibrator will again buzz, showing that the fault must
be in the timer, for all other parts of the primary circuit of that particular
coil have been proven to be working correctly. A dirty or faulty contact in
the timer, or a loose connection, will probably be the cause.
If the primary circuit is shown to be in good order, attention may at once
be given to the gasoline feed, for while the secondary circuits have not been
tested, it is extremely unlikely that the spark plugs or their connections will
prove defective on all four cylinders at the same time.
THE CARBURETOR
Touching the primer of the carburetor will show whether the gasoline
flows to the float chamber, for if it is present it will spurt out of the opening
through which the priming stem passes. If the air inlet is so arranged as to
permit it, gasoline dropping out of it when the carburetor is primed
excessively indicates that the liquid flows out of the spray nozzle, this part
thus being shown to be clear. If no gasoline shows around the priming stem,
the feed pipe or float valve may be suspected of being clogged, it being
taken for granted that there is gasoline in the tank and that the supply cock
is open. If it is found that gasoline is present in the air inlet, and that the
carburetor is damp with it when the primer has not been touched, it
indicates that the float chamber is flooded; the carburetor should be taken
apart for inspection and thorough cleaning.
When the engine will not start on cranking it eight times or so, it is
useless to continue to crank it, for there is every reason to believe that
something is wrong. Too often the difficulty is in forgetting to switch on the
ignition circuit or to open the gasoline feed. Cranking the engine slowly
will not reduce the pressure in the inlet pipe sufficiently to draw out of the
spray nozzle the quantity of gasoline required to form an inflammable
mixture; quick cranking is necessary. Too much priming will result in the
formation of a rich mixture; the gasoline should be permitted to evaporate,
or the carburetor drained, and then primed gently.
The failure of an engine to start on a cold day may be due to the slowness
with which gasoline evaporates when chilled. As it is obviously most
unwise to heat the carburetor with a flame, the best thing to do in such a
case is to pack it with cloths soaked with hot water. A little gasoline
squirted into the air inlet, or cotton waste soaked with gasoline and held
over the same opening, will almost always permit the engine to be started;
another method is to squirt a few drops of gasoline into the cylinders
through the relief cocks.
WEAK EXPLOSIONS
Regular but weak explosions may be due to too rich or too poor a
mixture, or to the escape of compression. Cranking the engine twice will
produce a compression stroke in each of the four cylinders, and if there is a
leak, the ease with which the piston in which it occurs may be pulled over
dead center will show its presence. A little soapy water around the spark
plug, relief cock, or other opening into the combustion space will show the
escape of compression in the formation of bubbles. A hiss inside of the
cylinder indicates a leaky piston ring, or that the openings of the rings are in
line, and when this sound is sharp and clear, the presence of a broken ring.
An additional proof of this is the undue heating of the crank case. If the
compression is correct, the carburetor may be readjusted to improve the
quality of the mixture. A poor mixture may be due to the partial clogging of
the spray nozzle or its passages, and a rich mixture to the choking of the air
inlet by dirt or dust, this being especially liable to occur when the part is
oily.
MISSING EXPLOSIONS
If an engine runs well at low speed, but misses when speeded up, the
trouble may be due to weak battery, stuck vibrator blade, or loose
connections. A battery that will produce a good spark at low engine speed
may not be able to respond to the greatly increased demands of high speed,
and similarly, at low speed the period during which the timer holds the
circuit closed is longer than at high speed, and the vibrator has more time to
get into action before the circuit is broken. A loose connection may be so
shaken by the vibrations of high speed as to break the circuit.
OVERHEATING
It sometimes happens that the engine will continue to run after the
ignition circuit is opened. This may be due to a failure of the water
circulation, which is indicated by the low temperature of the radiator, or by
the low speed or stopping of the fan from a slipping or broken belt. If the
cooling system is working properly, the lubrication must be investigated. If
the oil is flowing as it should, the cause will be found in the formation of a
carbon deposit in the combustion space, fine points of which will become
incandescent and ignite the mixture as it passes into the cylinder or as it is