Exam 15: Investment Appraisal Techniques

A business can either receive £200 now or an agreed amount in two years' time. If the business requires a return of 12% on sums invested, what is the minimum amount the business should agree to receive in two years' time?

If a 10% discount rate is used, what is the present value of the following two cash inflows? £1,600 received in one year's time, plus £2,000 received in two years' time.

Jigger Ltd is considering undertaking project X, which will involve an initial outlay of £600k. The project has the following cash inflows associated with it: What is the NPV of project X if a 12% discount rate is used?

Jigger Ltd is considering two alternative projects; each of which will involve an initial outlay of £600,000. Both will have a four-year life and are expected to yield the following cash inflows: Which of the following is not true?

The cash flows associated with a project are as follows: The payback period for the project is:

Shep Ltd is considering a possible four-year project. Details are as follows: The accounting rate of return of this project will be:

What does the accounting rate of return measure?

Alternative projects, M and N, have been evaluated and the following results found: Which of the following is the most valid reason for choosing to undertake project N?

Which of the following statements concerning the IRR is true?

Which of the following is an advantage of using the payback period?