How many IRRs are possible for the following set of cash flows? CF0 = -1,000, CF1 = + 500, CF2 = -300, CF3 = + 1,000, CF4 = + 200.

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

Exam 8: Net Present Value and Other Investment Criteria

A project has a payback period of five years and the firm employs a 10 percent cost of capital.Which of the following statements is correct concerning this Project's discounted payback?

(Multiple Choice)

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Question 41

A project can have as many different internal rates of return as it has:

(Multiple Choice)

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Question 42

The NPV of an investment made today is $10,000.If postponed for one year, the NPV at that time will increase by $1,000.Which of the following is correct if the opportunity cost of the investment is 12 percent?

(Multiple Choice)

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Question 43

Both the NPV and the internal rate of return methods recognize that the timing of cash flows affects project value.

(True/False)

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Question 44

What is the NPV for the following project cash flows at a discount rate of 15 percent? CF₀ = ($1,000), CF₁ = $700, CF₂ = $700.

(Multiple Choice)

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Question 45

A firm considers a project with the following cash flows: time-zero = +20,000, years 1-5 = -4,500.Should the project be accepted if the cost of capital is 10 percent?

(Multiple Choice)

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Question 46

ABC Corporation is experiencing hard capital rationing and will not be able to invest more than $1,000,000 this year.Develop a profitability index for the following four projects and state what would be selected: All four projects will last three years and the firm uses a 10 percent discount rate.

(Essay)

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Question 47

How many IRRs are possible for the following set of cash flows? CF₀ = -1,000, CF₁ = + 500, CF₂ = -300, CF₃ = + 1,000, CF₄ = + 200.

(Multiple Choice)

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Question 48

The profitability index for a project costing $40,000 and returning $15,000 annually for four years at an opportunity cost of capital of 12 percent is:

(Multiple Choice)

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Question 49

When the NPV of an investment is positive, then the IRR will be:

(Multiple Choice)

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Question 50

Soft rationing should never cost the firm anything.

(True/False)

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Question 51

What is the equivalent annual cost for a project that requires a $40,000 investment at time-period zero, and a $10,000 annual expense during each of the next 4 years, if the opportunity cost of capital is 10 percent?

(Multiple Choice)

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Question 52

Which of the following should be assumed about a project that requires a $100,000 investment at time-period zero, then returns $20,000 annually for five years?

(Multiple Choice)

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Question 53

Which of the following investment decision rules tends to improperly reject long-lived projects?

(Multiple Choice)

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Question 54

What should occur when a Project's net present value is determined to be negative?

(Multiple Choice)

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Question 55

The reason why the IRR criterion can give conflicting signals with mutually exclusive projects is:

(Multiple Choice)

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Question 56

Evaluate the following project using an IRR criterion, based on an opportunity cost of 10 percent: CF₀ = -6,000, CF₁ = +3,300, CF₂ = +3,300.

(Multiple Choice)

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Question 57

Ajax Corporation is planning a 10 year project that will have an initial cost of $500,000.During the first 2 years, there will be cash outflows of $40,000.Years 3-6 will see cash inflows of $120,000.Years 7-10 will see cash inflows of $200,000.If the company's required rate of return is 9%, determine the NPV of the project.

(Multiple Choice)

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Question 58

The payback rule states that a project is acceptable if you get your money back within a specified period.

(True/False)

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Question 59

One method that can be used to increase the NPV of a project is to decrease the:

(Multiple Choice)

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Question 60

Showing 41 - 60 of 130

Exam 8: Net Present Value and Other Investment Criteria

A project has a payback period of five years and the firm employs a 10 percent cost of capital.Which of the following statements is correct concerning this Project's discounted payback?

A project can have as many different internal rates of return as it has:

The NPV of an investment made today is $10,000.If postponed for one year, the NPV at that time will increase by $1,000.Which of the following is correct if the opportunity cost of the investment is 12 percent?

Both the NPV and the internal rate of return methods recognize that the timing of cash flows affects project value.

What is the NPV for the following project cash flows at a discount rate of 15 percent? CF0 = ($1,000), CF1 = $700, CF2 = $700.

A firm considers a project with the following cash flows: time-zero = +20,000, years 1-5 = -4,500.Should the project be accepted if the cost of capital is 10 percent?

ABC Corporation is experiencing hard capital rationing and will not be able to invest more than $1,000,000 this year.Develop a profitability index for the following four projects and state what would be selected: All four projects will last three years and the firm uses a 10 percent discount rate.

How many IRRs are possible for the following set of cash flows? CF0 = -1,000, CF1 = + 500, CF2 = -300, CF3 = + 1,000, CF4 = + 200.

The profitability index for a project costing $40,000 and returning $15,000 annually for four years at an opportunity cost of capital of 12 percent is:

When the NPV of an investment is positive, then the IRR will be:

Soft rationing should never cost the firm anything.

What is the equivalent annual cost for a project that requires a $40,000 investment at time-period zero, and a $10,000 annual expense during each of the next 4 years, if the opportunity cost of capital is 10 percent?

Which of the following should be assumed about a project that requires a $100,000 investment at time-period zero, then returns $20,000 annually for five years?

Which of the following investment decision rules tends to improperly reject long-lived projects?

What should occur when a Project's net present value is determined to be negative?

The reason why the IRR criterion can give conflicting signals with mutually exclusive projects is:

Evaluate the following project using an IRR criterion, based on an opportunity cost of 10 percent: CF0 = -6,000, CF1 = +3,300, CF2 = +3,300.

The payback rule states that a project is acceptable if you get your money back within a specified period.

One method that can be used to increase the NPV of a project is to decrease the:

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Using Discounted Cash-Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Working Capital Management

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Conclusion

What We Do and Do Not Know About Finance

Filters

What is the NPV for the following project cash flows at a discount rate of 15 percent? CF₀ = ($1,000), CF₁ = $700, CF₂ = $700.

How many IRRs are possible for the following set of cash flows? CF₀ = -1,000, CF₁ = + 500, CF₂ = -300, CF₃ = + 1,000, CF₄ = + 200.

Evaluate the following project using an IRR criterion, based on an opportunity cost of 10 percent: CF₀ = -6,000, CF₁ = +3,300, CF₂ = +3,300.