Exam 9: Net Present Value and Other Investment Criteria

If a firm accepts Project A it will not be feasible to also accept Project B because both projects would require the simultaneous and exclusive use of the same piece of machinery.These projects are considered to be:

Which one of the following is a project acceptance indicator given an independent project with investing type cash flows?

Which one of the following methods of analysis provides the best information on the cost-benefit aspects of a project?

There are two distinct discount rates at which a particular project will have a zero net present value.In this situation,the project is said to:

The internal rate of return is defined as the:

Hungry Hoagie's has identified the following two mutually exclusive projects: At what rate would you be indifferent between these two projects?

Which two methods of project analysis were the most widely used by CEO's as of 1999?

You are analyzing a project and have gathered the following data: Based on the payback period of _____ years for this project,you should _____ the project.

You are considering the following two mutually exclusive projects.Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project.Neither project has any salvage value. Should you accept or reject these projects based on IRR analysis?

You are comparing two mutually exclusive projects.The crossover point is 12.3 percent.You have determined that you should accept project A if the required return is 13.1 percent.This implies you should:

Blue Water Systems is analyzing a project with the following cash flows.Should this project be accepted based on the discounting approach to the modified internal rate of return if the discount rate is 14 percent? Why or why not?

A firm evaluates all of its projects by using the NPV decision rule.At a required return of 14 percent,the NPV for the following project is _____ and the firm should _____ the project.

The profitability index (PI)of a project is 1.0.What do you know about the project's net present value (NPV)and its internal rate of return (IRR)?

The internal rate of return:

Rosa's Designer Gowns creates exquisite gowns for special occasions on a prepaid basis only.The required return is 8 percent.Rosa has estimated the cash flows for one gown as follows.Should Rosa sell this gown at the price she is currently considering based on the estimated internal rate of return (IRR)?

Samuelson Electronics has a required payback period of three years for all of its projects.Currently,the firm is analyzing two independent projects.Project A has an expected payback period of 2.8 years and a net present value of $6,800.Project B has an expected payback period of 3.1 years with a net present value of $28,400.Which projects should be accepted based on the payback decision rule?

Which one of the following is an advantage of the average accounting return method of analysis?

Which one of the following methods determines the amount of the change a proposed project will have on the value of a firm?

The present value of an investment's future cash flows divided by the initial cost of the investment is called the:

You are analyzing a project and have gathered the following data: Based on the profitability index of _____ for this project,you should _____ the project.