You are analyzing a project and have prepared the following data: $\begin{array} { | l | l | } \hline \text { Year } & \text { Cash Flow } \\ \hline 0 & - £ 169,000 \\ \hline 1 & £ 46,200 \\ \hline 2 & £ 87,300 \\ \hline 3 & £ 41,000 \\ \hline 4 & £ 39,000 \\ \hline \end{array}$ Required payback period: 2.5 years Required AAR: 7.25% Required return: 8.50% Based on the net present value of _____for this project, you should _____ the project.

A) -£2,021.28; reject B) -£406.19; reject C) £7,978.72; accept D) £9,836.74; accept E) £12,684.23; accept A) -£2,021.28; reject B) -£406.19; reject C) £7,978.72; accept D) £9,836.74; accept E) £12,684.23; accept

\[\begin{array}{l} \text { You are analyzing a project and have prepared the following data: }\\ \begin{array} { | l | l | } \hline \text { Year } & \text { Cash Flow } \\ \hline 0 & - £ 169,000 \\ \hline 1 & £ 46,200 \\ \hline 2 & £ 87,300 \\ \hline 3 & £ 41,000 \\ \hline 4 & £ 39,000 \\ \hline \end{array} \end{array}\] Required payback period: 2.5 years Required AAR: 7.25% Required return: 8.50% Based on the internal rate of return of _____for this project, you should _____ the project.

A) 8.95%; accept B) 10.75%; accept C) 8.44%; reject D) 9.67%; reject E) 10.33%; reject A) 8.95%; accept B) 10.75%; accept C) 8.44%; reject D) 9.67%; reject E) 10.33%; reject

Exam 6: Net Present Value and Other Investment Rules

Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives. Matt has been asked for his best recommendation given this information. His recommendation should be to accept:

(Multiple Choice)

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Question 61

The payback period rule is a convenient and useful tool because:

(Multiple Choice)

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Question 62

You are analyzing a project and have prepared the following data: Year Cash Flow 0 -£169,000 1 £46,200 2 £87,300 3 £41,000 4 £39,000 Required payback period: 2.5 years Required AAR: 7.25% Required return: 8.50% Based on the net present value of _for this project, you should _ the project.

(Multiple Choice)

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Question 63

The Winston Co. is considering two mutually exclusive projects with the following cash flows. What is the the incremental IRR?

(Multiple Choice)

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Question 64

Jack is considering adding toys to his general store.He estimates that the cost of inventory will be £4,200.The remodeling expenses and shelving costs are estimated at £1,500.Toy sales are Expected to produce net cash inﬂows of £1,200, £1,500, £1,600, and £1,750 over the next four years, Respectively.Should Jack add toys to his store if he assigns a three-year payback period to this Project?

(Multiple Choice)

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Question 65

You are trying to determine whether to accept project A or project B.These projects are mutually exclusive.As part of your analysis, you should compute the incremental IRR by determining:

(Multiple Choice)

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Question 66

The Liberty Co.is considering two projects.Project A consists of building a wholesale book outlet on lot #169 of the Englewood Retail Center.Project B consists of building a sit-down restaurant on Lot #169 of the Englewood Retail Center.When trying to decide whether to build the book outlet or The restaurant, management should rely most heavily on the analysis results from the _____ Method of analysis.

(Multiple Choice)

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Question 67

The proﬁtability index is closely related to:

(Multiple Choice)

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Question 68

The discount rate that makes the net present value of an investment exactly equal to zero is called the:

(Multiple Choice)

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Question 69

The payback period rule:

(Multiple Choice)

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Question 70

You are analyzing the following two mutually exclusive projects and have developed the following information. What is the incremental IRR? \begin{tabular} { | l | l | l | } \hline Year & Project A & Project B \\ \hline 0 & $£ 84,500$ & $£ 76,900$ \\ \hline 1 & $£ 29,000$ & $£ 25,000$ \\ \hline 2 & $£ 40,000$ & $£ 35,000$ \\ \hline 3 & $£ 27,000$ & $£ 26,000$ \\ \hline \end{tabular}

(Multiple Choice)

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Question 71

An investment cost £10,000 with expected cash ﬂows of £3,000 for 5 years.The discount rate is 15.2382%.The NPV is _ and the IRR is _ for the project.

(Multiple Choice)

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Question 72

All else constant, the net present value of a typical investment project increases when:

(Multiple Choice)

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Question 73

Brounen, et al.(2006) found that _ and _ were the two most popular capital budgeting methods in the UK.

(Multiple Choice)

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Question 74

The internal rate of return tends to be:

(Multiple Choice)

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Question 75

Which one of the following statements concerning net present value (NPV) is correct?

(Multiple Choice)

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Question 76

List and brieﬂy discuss the advantages and disadvantages of the internal rate of return (IRR) rule.

(Essay)

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Question 77

The length of time required for an investment to generate cash ﬂows suﬃcient to recover the initial cost of the investment is called the:

(Multiple Choice)

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Question 78

You are analyzing a project and have prepared the following data: Year Cash Flow 0 -£169,000 1 £46,200 2 £87,300 3 £41,000 4 £39,000 Required payback period: 2.5 years Required AAR: 7.25% Required return: 8.50% Based on the internal rate of return of _for this project, you should _ the project.

(Multiple Choice)

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Question 79

The internal rate of return may be deﬁned as:

(Multiple Choice)

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Question 80

Showing 61 - 80 of 110

Exam 6: Net Present Value and Other Investment Rules

Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives. Matt has been asked for his best recommendation given this information. His recommendation should be to accept:

The payback period rule is a convenient and useful tool because:

The Winston Co. is considering two mutually exclusive projects with the following cash flows. What is the the incremental IRR?

You are trying to determine whether to accept project A or project B.These projects are mutually exclusive.As part of your analysis, you should compute the incremental IRR by determining:

The proﬁtability index is closely related to:

The discount rate that makes the net present value of an investment exactly equal to zero is called the:

The payback period rule:

An investment cost £10,000 with expected cash ﬂows of £3,000 for 5 years.The discount rate is 15.2382%.The NPV is ___ and the IRR is ___ for the project.

All else constant, the net present value of a typical investment project increases when:

Brounen, et al.(2006) found that ___ and ___ were the two most popular capital budgeting methods in the UK.

The internal rate of return tends to be:

Which one of the following statements concerning net present value (NPV) is correct?

List and brieﬂy discuss the advantages and disadvantages of the internal rate of return (IRR) rule.

The length of time required for an investment to generate cash ﬂows suﬃcient to recover the initial cost of the investment is called the:

The internal rate of return may be deﬁned as:

Introduction to Corporate Finance

Corporate Governance

Financial Statement Analysis

Discounted Cash Flow Valuation

Bond, Equity and Firm Valuation

Making Capital Investment Decisions

Risk Analysis, Real Options and Capital Budgeting

Risk and Return: Lessons From Market History

Risk and Return: the Capital Asset Pricing Model

Factor Models and the Arbitrage Pricing Theory

Risk, Cost of Capital and Capital Budgeting

Efficient Capital Markets and Behavioural Finance

Long-Term Financing: an Introduction

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Equity Financing

Debt Financing

Leasing

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Financial Risk Management With Derivatives

Short-Term Finance and Planning

Short-Term Capital Management

Mergers and Acquisitions

Financial Distress

International Corporate Finance

Filters

An investment cost £10,000 with expected cash ﬂows of £3,000 for 5 years.The discount rate is 15.2382%.The NPV is _ and the IRR is _ for the project.

Brounen, et al.(2006) found that _ and _ were the two most popular capital budgeting methods in the UK.