Exam 13: Weighing Net Present Value and Other Capital Budgeting Criteria

A financial asset will pay you $10,000 at the end of 10 years if you pay premiums of $175 per year at the end of each year for 10 years.What is the IRR of this financial asset?

(Multiple Choice)

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Question 101

Compute the IRR statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.

(Multiple Choice)

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Question 102

Suppose your firm is considering investing in a project with the cash flows shown as follows,that the required rate of return on projects of this risk class is 10 percent,and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years,respectively.Use the discounted payback decision to evaluate this project; should it be accepted or rejected?

(Multiple Choice)

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Question 103

Suppose your firm is considering investing in a project with the cash flows shown as follows,that the required rate of return on projects of this risk class is 10 percent,and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years,respectively.Use the MIRR decision to evaluate this project; should it be accepted or rejected?

(Multiple Choice)

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Question 104

A graph of a project's ________ is a function of cost of capital.

(Multiple Choice)

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Question 105

Suppose your firm is considering two mutually exclusive,required projects with the cash flows shown as follows.The required rate of return on projects of both of their risk class is 10 percent,and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three and a half years,respectively. Use the PI decision rule to evaluate these projects; which one(s)should be accepted or rejected?

(Multiple Choice)

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Question 106

Use NPV profiles to reconcile sources of conflict between NPV and IRR methods.

(Essay)

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Question 107

Suppose your firm is considering two mutually exclusive,required projects with the cash flows shown as follows.The required rate of return on projects of both of their risk class is 8 percent,and the maximum allowable payback and discounted payback statistic for the projects are two and three years,respectively. Use the NPV decision rule to evaluate these projects; which one(s)should be accepted or rejected?

(Multiple Choice)

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Question 108

Suppose your firm is considering investing in a project with the cash flows shown as follows,that the required rate of return on projects of this risk class is 12 percent,and that the maximum allowable payback and discounted payback statistic for the project are two and two and a half years,respectively. Use the payback decision rule to evaluate this project; should it be accepted or rejected?

(Multiple Choice)

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Question 109

Compute the IRR for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent.

(Multiple Choice)

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Question 110

Of the capital budgeting techniques discussed,which works equally well with normal and non-normal cash flows and with independent and mutually exclusive projects?

(Multiple Choice)

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Question 111

The net present value decision technique may not be the only pertinent unit of measure if the firm is facing:

(Multiple Choice)

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Question 112

All of the following capital budgeting tools are suitable for firms facing time constraints EXCEPT:

(Multiple Choice)

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Question 113

Compute the NPV for Project X and accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.

(Multiple Choice)

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Question 114

Suppose your firm is considering investing in a project with the cash flows shown as follows,that the required rate of return on projects of this risk class is 8 percent,and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years,respectively. Use the PI decision rule to evaluate this project; should it be accepted or rejected?

(Multiple Choice)

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Question 115

Which of the following is a technique for evaluating capital projects that is particularly useful when firms face time constraints in repaying investors?

(Multiple Choice)

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Question 116

Suppose your firm is considering two mutually exclusive,required projects with the cash flows shown as follows.The required rate of return on projects of both of their risk class is 10 percent,and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three and a half years,respectively. Use the MIRR decision rule to evaluate these projects; which one(s)should be accepted or rejected?

(Multiple Choice)

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Question 117

Which of the following is a technique for evaluating capital projects that tells how long it will take a firm to earn back the money invested in a project?

(Multiple Choice)

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Question 118

Compute the MIRR statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.

(Multiple Choice)

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Question 119

We accept projects with a positive NPV because it means that:

(Multiple Choice)

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Question 120

Showing 101 - 120 of 127

A financial asset will pay you $10,000 at the end of 10 years if you pay premiums of $175 per year at the end of each year for 10 years.What is the IRR of this financial asset?

Compute the IRR statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.

A graph of a project's ________ is a function of cost of capital.

Use NPV profiles to reconcile sources of conflict between NPV and IRR methods.

Compute the IRR for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent.

Of the capital budgeting techniques discussed,which works equally well with normal and non-normal cash flows and with independent and mutually exclusive projects?

The net present value decision technique may not be the only pertinent unit of measure if the firm is facing:

All of the following capital budgeting tools are suitable for firms facing time constraints EXCEPT:

Compute the NPV for Project X and accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.

Which of the following is a technique for evaluating capital projects that is particularly useful when firms face time constraints in repaying investors?

Which of the following is a technique for evaluating capital projects that tells how long it will take a firm to earn back the money invested in a project?

Compute the MIRR statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.

We accept projects with a positive NPV because it means that:

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Working Capital and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, equity, and Capital Structure

Sharing Firm Wealth: Dividends, share Repurchases and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

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