Exam 11: Project Analysis and Evaluation
Exam 1: Introduction to Corporate Finance262 Questions
Exam 2: Financial Statements, Taxes, and Cash Flow411 Questions
Exam 3: Working With Financial Statements414 Questions
Exam 4: Long-Term Financial Planning and Growth369 Questions
Exam 5: Introduction to Valuation: the Time Value of Money282 Questions
Exam 6: Discounted Cash Flow Valuation415 Questions
Exam 7: Interest Rates and Bond Valuation394 Questions
Exam 8: Stock Valuation401 Questions
Exam 9: Net Present Value and Other Investment Criteria409 Questions
Exam 10: Making Capital Investment Decisions365 Questions
Exam 11: Project Analysis and Evaluation428 Questions
Exam 12: Some Lessons From Capital Market History330 Questions
Exam 13: Return, Risk, and the Security Market Line417 Questions
Exam 14: Cost of Capital377 Questions
Exam 15: Raising Capital342 Questions
Exam 16: Financial Leverage and Capital Structure Policy385 Questions
Exam 17: Dividends and Payout Policy378 Questions
Exam 18: Short-Term Finance and Planning427 Questions
Exam 19: Cash and Liquidity Management378 Questions
Exam 20: Credit and Inventory Management384 Questions
Exam 21: International Corporate Finance372 Questions
Exam 22: Behavioral Finance: Implications for Financial Management269 Questions
Exam 23: Enterprise Risk Management336 Questions
Exam 24: Options and Corporate Finance308 Questions
Exam 25: Option Valuation449 Questions
Exam 26: Mergers and Acquisitions78 Questions
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Which of the following statements regarding NPV analysis is correct?
(Multiple Choice)
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A project has the following estimated data: price = $200 per unit; variable costs = $150 per unit; fixed costs = $400,000; required return = 9%; initial investment = $1,500,000; $200,000 salvage
Value; life = 15 years. What is the accounting break-even quantity?
(Multiple Choice)
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Which one of the following is an example of a strategic option?
(Multiple Choice)
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If a project manager wants to know which aspects of a project require the closest monitoring to ensure that the project remains profitable, the manager should use the technique known as _____
Analysis.
(Multiple Choice)
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The option to wait is partially dependent upon the discount rate applied to the project being
evaluated.
(True/False)
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If a firm's fixed costs are exactly equal to its depreciation expense, and both are greater than zero, then at its financial break-even point the DOL ____________. (Assume that the project has
Conventional cash flows, no salvage value, and no net working capital investments.)
(Multiple Choice)
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The additional cost incurred when one more unit of output is produced is referred to as the _____ cost.
(Multiple Choice)
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All else the same, if you decrease fixed costs, operating leverage will also decline.
(True/False)
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The option to wait has a value equal to the net present value of the project if it is started today
versus the net present value if it is started at some later date.
(True/False)
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The Handelcreek Co. is considering expanding their operations. Fixed costs are estimated at $86,000 a year. The variable cost per unit is estimated at $18.50. The estimated sales price is
$34)00 per unit. What is the cash break-even point of this project?
(Multiple Choice)
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Projected fixed costs is generally least subject to forecasting risk.
(True/False)
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An analysis of what happens to NPV estimates when only one variable is changed is called:
(Multiple Choice)
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A project that just breaks even on a financial basis has a discounted payback equal to the project's
life.
(True/False)
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The percentage change in firm (or project) operating cash flow relative to the percentage change in quantity sold is called (the):
(Multiple Choice)
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Taylor and Ashcroft is reviewing a new product with labour cost of $16.40 per unit, raw materials cost of $41.65 a unit, and fixed costs of $164,000 a year. Sales are projected at 85,000 units per
Year over the 3-year life of the product. What is the amount of the total variable costs per year?
(Multiple Choice)
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The contribution margin is defined as the difference between the:
(Multiple Choice)
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Economic theory suggests that ___________ the likelihood of discovering a positive NPV project.
(Multiple Choice)
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A proposed project has fixed costs of $3,700, depreciation expense of $1,400, and a sales quantity of 1,500 units. What is the contribution margin if the projected level of sales is the accounting break-
Even point?
(Multiple Choice)
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