Question 1

Which of the following statements is FALSE?

Accepted Answer

A)  The payback investment rule is based on the notion that an opportunity that pays back its initial investments quickly is a good idea. 
B)  An internal rate of return (IRR) will always exist for an investment opportunity. 
C)  A net present value (NPV) will always exist for an investment opportunity. 
D)  In general, there can be as many internal rates of return (IRRs) as the number of times the project's cash flows change sign over time. 
A)  The payback investment rule is based on the notion that an opportunity that pays back its initial investments quickly is a good idea. 
B)  An internal rate of return (IRR) will always exist for an investment opportunity. 
C)  A net present value (NPV) will always exist for an investment opportunity. 
D)  In general, there can be as many internal rates of return (IRRs) as the number of times the project's cash flows change sign over time.

Question 2

Consider the following two projects:
 
The net present value (NPV) of project B is closest to ________.

Accepted Answer

A)  9.3 
B)  10.2 
C)  11.6 
D)  23.2 
A)  9.3 
B)  10.2 
C)  11.6 
D)  23.2

Question 3

Which of the following is NOT a valid method of modifying cash flows to produce a MIRR?

Accepted Answer

A)  Discount all of the negative cash flows to time 0 and leave the positive cash flows alone. 
B)  Leave the initial cash flow alone and compound all of the remaining cash flows to the final period of the project. 
C)  Discount all of the negative cash flows to the present and compound all of the positive cash flows to the end of the project. 
D)  Turn multiple negative cash flows into a single negative cash flow by summing all negative cash flows over the project's lifetime. 
A)  Discount all of the negative cash flows to time 0 and leave the positive cash flows alone. 
B)  Leave the initial cash flow alone and compound all of the remaining cash flows to the final period of the project. 
C)  Discount all of the negative cash flows to the present and compound all of the positive cash flows to the end of the project. 
D)  Turn multiple negative cash flows into a single negative cash flow by summing all negative cash flows over the project's lifetime.

Question 4

The cash flows for four projects are shown below, along with the cost of capital for these projects. If these projects are mutually exclusive, which one should be taken?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Which of the following statements is FALSE?

Consider the following two projects: The net present value (NPV) of project B is closest to ________.

Which of the following is NOT a valid method of modifying cash flows to produce a MIRR?

The cash flows for four projects are shown below, along with the cost of capital for these projects. If these projects are mutually exclusive, which one should be taken?

Corporate Finance and the Financial Manager

Introduction to Financial Statement Analysis

Time Value of Money: an Introduction

Time Value of Money: Valuing Cash Flow Streams

Interest Rates

Bonds

Stock Valuation

Fundamentals of Capital Budgeting

Stock Valuation: a Second Look

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

The Cost of Capital

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Financial Modeling and Pro Forma Analysis

Working Capital Management

Short-Term Financial Planning

Option Applications and Corporate Finance

Mergers and Acquisitions

International Corporate Finance

Leasing

Insurance and Risk Management

Corporate Governance

Filters

Exam 8: Investment Decision Rules

Which of the following statements is FALSE?

Consider the following two projects: The net present value (NPV) of project B is closest to ________.

Which of the following is NOT a valid method of modifying cash flows to produce a MIRR?

The cash flows for four projects are shown below, along with the cost of capital for these projects. If these projects are mutually exclusive, which one should be taken?

Corporate Finance and the Financial Manager

Introduction to Financial Statement Analysis

Time Value of Money: an Introduction

Time Value of Money: Valuing Cash Flow Streams

Interest Rates

Bonds

Stock Valuation

Fundamentals of Capital Budgeting

Stock Valuation: a Second Look

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

The Cost of Capital

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Financial Modeling and Pro Forma Analysis

Working Capital Management

Short-Term Financial Planning

Option Applications and Corporate Finance

Mergers and Acquisitions

International Corporate Finance

Leasing

Insurance and Risk Management

Corporate Governance

Filters