Question 1

The formula for the equivalent annual value method is:

Accepted Answer

A) True 
 B)False

Question 2

If an investment costing $2000 is expected to generate real cash flows of $900 p.a.for three years,prices are expected to increase at a rate of 10% p.a. ,and the nominal cost of capital is 15%,what is the net present value of the investment?

Accepted Answer

A) $520.59 
B) $740.79 
C) $471.97 
D) $389.79 
A) $520.59 
B) $740.79 
C) $471.97 
D) $389.79

Question 3

Given that a project with an estimated life of eight years has a net present value of $125 000,calculate its equivalent annual value if the required rate of return is 9% p.a.

Accepted Answer

A) $11 250 p.a. 
B) $250 937 p.a. 
C) $22 584 p.a. 
D) $125 000 p.a. 
A) $11 250 p.a. 
B) $250 937 p.a. 
C) $22 584 p.a. 
D) $125 000 p.a.

Question 4

An investment of $1.5 million is expected to generate cash flows of $625 000 p.a. ,at constant prices,over the next three years.The required rate of return,assuming zero inflation,is 17% p.a.If prices are expected to increase at the rate of 10% p.a. ,the project's net present value is:

Accepted Answer

A) ($119 009) 
B) $159 456 
C) ($343 856) 
D) $19 090 
A) ($119 009) 
B) $159 456 
C) ($343 856) 
D) $19 090

The formula for the equivalent annual value method is:

If an investment costing $2000 is expected to generate real cash flows of $900 p.a.for three years,prices are expected to increase at a rate of 10% p.a. ,and the nominal cost of capital is 15%,what is the net present value of the investment?

Given that a project with an estimated life of eight years has a net present value of $125 000,calculate its equivalent annual value if the required rate of return is 9% p.a.

An investment of $1.5 million is expected to generate cash flows of $625 000 p.a. ,at constant prices,over the next three years.The required rate of return,assuming zero inflation,is 17% p.a.If prices are expected to increase at the rate of 10% p.a. ,the project's net present value is:

Introduction

Consumption, Investment and the Capital Market

The Time Value of Money: An Introduction to Financial Mathematics

Applying the Time Value of Money to Security Valuation

Project Evaluation: Principles and Methods

Risk and Return

The Capital Market

Sources of Finance: Equity

Sources of Finance: Debt

Payout Policy

Principles of Capital Structure

Capital Structure Decisions

The Cost of Capital and Taxation Issues in Project Evaluation

Leasing and Other Equipment Finance

Capital Market Efficiency

Futures Contracts

Options and Contingent Claims

Analysis of Takeovers

International Financial Management

Management of Short-Term Assets: Inventory

Management of Short-Term Assets: Liquid Assets and Accounts Receivable

Filters

Exam 6: The Application of Project Evaluation Methods

The formula for the equivalent annual value method is:

If an investment costing $2000 is expected to generate real cash flows of $900 p.a.for three years,prices are expected to increase at a rate of 10% p.a. ,and the nominal cost of capital is 15%,what is the net present value of the investment?

Given that a project with an estimated life of eight years has a net present value of $125 000,calculate its equivalent annual value if the required rate of return is 9% p.a.

An investment of $1.5 million is expected to generate cash flows of $625 000 p.a. ,at constant prices,over the next three years.The required rate of return,assuming zero inflation,is 17% p.a.If prices are expected to increase at the rate of 10% p.a. ,the project's net present value is:

Introduction

Consumption, Investment and the Capital Market

The Time Value of Money: An Introduction to Financial Mathematics

Applying the Time Value of Money to Security Valuation

Project Evaluation: Principles and Methods

Risk and Return

The Capital Market

Sources of Finance: Equity

Sources of Finance: Debt

Payout Policy

Principles of Capital Structure

Capital Structure Decisions

The Cost of Capital and Taxation Issues in Project Evaluation

Leasing and Other Equipment Finance

Capital Market Efficiency

Futures Contracts

Options and Contingent Claims

Analysis of Takeovers

International Financial Management

Management of Short-Term Assets: Inventory

Management of Short-Term Assets: Liquid Assets and Accounts Receivable

Filters