How many possible IRRs could you find for the following set of cash flows? \[\begin{array} { c c c c c c c } \text { Timne } & 0 & 1 & 2 & 3 & 4 \\ \text { Cash Flow } & - \$ 201,000 & - \$ 37,350 & \$ 460,180 & \$ 217,020 & - \$ 5,000 \end{array}\]

A) 1 B) 2 C) 3 D) 4 A) 1 B) 2 C) 3 D) 4

Compute the NPV for Project X and accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent. \[\begin{array}{l} \begin{array} {| l | l | l | l | l | l | l |} \hline\text {Time: }&0&1&2&3&4&5\\ \hline\text {Cash flow:}&-75&-75&0&100&75&50\\\hline \end{array} \end{array}\]

A) $12.93 B) $14.22 C) $62.07 D) $136.90 A) $12.93 B) $14.22 C) $62.07 D) $136.90

Suppose your firm is considering two independent projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 12 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three years, respectively. \[\begin{array}{l} \begin{array} {| l | l | l | l | l | } \hline\text {Time: }&0&1&2&3\\ \hline\text {Project A Cash flow:}&-5,000&1,000&3,000&5,000\\ \hline\text {Project b Cash flow:}&-10,000&5,000&5,000&5,000\\\hline \end{array} \end{array}\] Use the PI decision rule to evaluate these projects; which one(s) should be accepted or rejected?

A) Accept both A and B B) Accept neither A nor B C) Accept A, reject B D) Reject A, accept B A) Accept both A and B B) Accept neither A nor B C) Accept A, reject B D) Reject A, accept B

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and three years, respectively. \[\begin{array}{l} \begin{array} {| l | l | l | l | l | } \hline\text {Time: }&0&1&2&3\\ \hline\text {Project A Cash flow:}&-20,000&10,000&30,000&1,000\\ \hline\text {Project b Cash flow:}&-30,000&10,000&20,000&50,000\\\hline \end{array} \end{array}\] Use the payback decision rule to evaluate these projects; which one(s) should be accepted or rejected?

A) Accept both A and B B) Accept neither A nor B C) Accept A, reject B D) Reject A, accept B A) Accept both A and B B) Accept neither A nor B C) Accept A, reject B D) Reject A, accept B

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and three years, respectively. \[\begin{array}{l} \begin{array} {| l | l | l | l | l | } \hline\text {Time: }&0&1&2&3\\ \hline\text {Project A Cash flow:}&-20,000&10,000&30,000&1,000\\ \hline\text {Project b Cash flow:}&-30,000&10,000&20,000&50,000\\\hline \end{array} \end{array}\] Use the MIRR decision rule to evaluate these projects; which one(s) should be accepted or rejected?

A) Accept both A and B B) Accept neither A nor B C) Accept A, reject B D) Reject A, accept B A) Accept both A and B B) Accept neither A nor B C) Accept A, reject B D) Reject A, accept B

Compute the NPV statistic for Project Y given the following cash flows if the appropriate cost of capital is 10 percent. Project Y \[\begin{array} { c c c c c c c c } \text { Trme } &0 & 1 & 2 & 3 & 4 & 5 \\ \text { Cash Flow } & - \$ 50,000 & \$ 7,000 & \$ 20,000 & \$ 20,000 & \$ 20,000 & \$ 10,000 \end{array}\]

A) ?$19,594.29 B) $7,788.34 C) $9,367.11 D) $107,788.34 A) ?$19,594.29 B) $7,788.34 C) $9,367.11 D) $107,788.34

Exam 13: Weighing Net Present Value and Other Capital Budgeting Criteria

Compute the IRR for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent. Time: 0 1 2 3 4 5 Cash flow: -1,000 -75 100 100 0 2,000

(Multiple Choice)

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Question 41

Which of the following statements is correct regarding the NPV profile?

(Multiple Choice)

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Question 42

How many possible IRRs could you find for the following set of cash flows? Timne 0 1 2 3 4 Cash Flow -\ 201,000 -\ 37,350 \ 460,180 \ 217,020 -\ 5,000

(Multiple Choice)

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Question 43

Rate-based statistics represent summary cash flows, and these summaries tend to lose which two important details?

(Multiple Choice)

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Question 44

Compute the NPV for Project X and accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent. Time: 0 1 2 3 4 5 Cash flow: -75 -75 0 100 75 50

(Multiple Choice)

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Question 45

The net present value decision technique uses a statistic denominated in

(Multiple Choice)

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Question 46

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 10 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three and a half years, respectively. Time: 0 1 2 3 Project A Cash flow: -1,000 300 400 700 Project b Cash flow: -500 200 400 300 Use the PI decision rule to evaluate these projects; which one(s) should be accepted or rejected?

(Multiple Choice)

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Question 47

Suppose your firm is considering two independent projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 12 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three years, respectively. Time: 0 1 2 3 Project A Cash flow: -5,000 1,000 3,000 5,000 Project b Cash flow: -10,000 5,000 5,000 5,000 Use the PI decision rule to evaluate these projects; which one(s) should be accepted or rejected?

(Multiple Choice)

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Question 48

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and three years, respectively. Time: 0 1 2 3 Project A Cash flow: -20,000 10,000 30,000 1,000 Project b Cash flow: -30,000 10,000 20,000 50,000 Use the payback decision rule to evaluate these projects; which one(s) should be accepted or rejected?

(Multiple Choice)

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Question 49

Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Use the IRR decision to evaluate this project; should it be accepted or rejected? Time 0 1 2 3 4 5 6 Cash Flow -\ 5,000 \ 1,200 \ 1,400 \ 1,600 \ 1,600 \ 1,100 \ 2,000

(Multiple Choice)

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Question 50

Which of the following is a technique for evaluating capital projects that tells how long it will take a firm to earn back the money invested in a project plus interest at market rates?

(Multiple Choice)

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Question 51

Which capital budgeting technique step in the decision process is not used to evaluate a group of independent projects?

(Multiple Choice)

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Question 52

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and three years, respectively. Time: 0 1 2 3 Project A Cash flow: -20,000 10,000 30,000 1,000 Project b Cash flow: -30,000 10,000 20,000 50,000 Use the MIRR decision rule to evaluate these projects; which one(s) should be accepted or rejected?

(Multiple Choice)

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Question 53

Compute the NPV statistic for Project Y given the following cash flows if the appropriate cost of capital is 10 percent. Project Y Trme 0 1 2 3 4 5 Cash Flow -\ 50,000 \ 7,000 \ 20,000 \ 20,000 \ 20,000 \ 10,000

(Multiple Choice)

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Question 54

Which of the following tools is suitable for choosing between mutually exclusive projects?

(Multiple Choice)

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Question 55

Compute the MIRR statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent. Time: 0 1 2 3 4 5 Cash flow: -175 75 0 100 75 50

(Multiple Choice)

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Question 56

Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years, respectively. Use the MIRR decision to evaluate this project; should it be accepted or rejected? Time 0 1 2 3 4 5 6 Cash Flow -\ 85,000 \ 12,000 \ 11,000 \ 13,000 \ 21,000 \ 31,000 \ 32,000

(Multiple Choice)

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Question 57

Compute the discounted payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent and the maximum allowable discounted payback is three years. Time: 0 1 2 3 4 5 Cash flow: -1,000 500 480 400 300 150

(Multiple Choice)

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Question 58

Which of the following best describes the NPV profile?

(Multiple Choice)

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Question 59

Which of the following is a technique for evaluating capital projects that is particularly useful when firms face time constraints in repaying investors?

(Multiple Choice)

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Question 60

Compute the IRR for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent. Time: 0 1 2 3 4 5 Cash flow: -1,000 -75 100 100 0 2,000

Which of the following statements is correct regarding the NPV profile?

How many possible IRRs could you find for the following set of cash flows? Timne 0 1 2 3 4 Cash Flow -\ 201,000 -\ 37,350 \ 460,180 \ 217,020 -\ 5,000

Rate-based statistics represent summary cash flows, and these summaries tend to lose which two important details?

Compute the NPV for Project X and accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent. Time: 0 1 2 3 4 5 Cash flow: -75 -75 0 100 75 50

The net present value decision technique uses a statistic denominated in

Which of the following is a technique for evaluating capital projects that tells how long it will take a firm to earn back the money invested in a project plus interest at market rates?

Which capital budgeting technique step in the decision process is not used to evaluate a group of independent projects?

Compute the NPV statistic for Project Y given the following cash flows if the appropriate cost of capital is 10 percent. Project Y Trme 0 1 2 3 4 5 Cash Flow -\ 50,000 \ 7,000 \ 20,000 \ 20,000 \ 20,000 \ 10,000

Which of the following tools is suitable for choosing between mutually exclusive projects?

Compute the MIRR statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent. Time: 0 1 2 3 4 5 Cash flow: -175 75 0 100 75 50

Which of the following best describes the NPV profile?

Which of the following is a technique for evaluating capital projects that is particularly useful when firms face time constraints in repaying investors?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

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