FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 9: Net Present Value and Other Investment Criteria

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

A project that provides annual cash flows of $12,600 for 12 years costs $67,150 today. At what rate would you be indifferent between accepting the project and rejecting it?

A) 15.28 percent
B) 15.40 percent
C) 15.51 percent
D) 15.62 percent
E) 15.74 percent

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

You are considering a project with an initial cost of $7,800. What is the payback period for this project if the cash inflows are $1,100, $1,640, $3,800, and $4,500 a year over the next four years, respectively?

A) 3.21 years
B) 3.28 years
C) 3.36 years
D) 4.21 years
E) 4.29 years

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

Motor City Productions sells original automotive art on a prepaid basis as each piece is uniquely designed to the customer's specifications. For one project, the cash flows are estimated as follows. Based on the internal rate of return (IRR) , should this project be accepted if the required return is 9 percent?

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

Scott is considering a project that will produce cash inflows of $2,100 a year for 4 years. The project has a 12 percent required rate of return and an initial cost of $5,000. What is the discounted payback period?

Which one of the following methods of project analysis is defined as computing the value of a project based upon the present value of the project's anticipated cash flows?

Colin is analyzing a project and has gathered the following data. Based on this data, what is the average accounting rate of return? The project's assets will be depreciated using straight-line depreciation to a zero book value over the life of the project.

A project produces annual net income of $46,200, $51,800, and $62,900 over its 3-year life, respectively. The initial cost of the project is $675,000. This cost is depreciated straight-line to a zero book value over three years. What is the average accounting rate of return if the required discount rate is 14.5 percent?

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:

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)?

An investment has the following cash flows and a required return of 13 percent. Based on IRR, should this project be accepted? Why or why not?

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

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.

The Taxi Co. is evaluating a project with the following cash flows: The company uses a 10 percent interest rate on all of its projects. What is the MIRR using the discounted approach?

Alicia is considering adding toys to her gift shop. She estimates that the cost of inventory will be $7,500. The remodeling expenses and shelving costs are estimated at $1,500. Toy sales are expected to produce net cash inflows of $1,800, $2,700, $3,200, and $3,400 over the next four years, respectively. Should Alicia add toys to her store if she assigns a three-year payback period to this project? Why or why not?

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

Net present value:

A project's average net income divided by its average book value is referred to as the project's average:

The length of time a firm must wait to recoup, in present value terms, the money it has in invested in a project is referred to as the:

Southern Chicken is considering two projects. Project A consists of creating an outdoor eating area on the unused portion of the restaurant's property. Project B would use that outdoor space for creating a drive-thru service window. When trying to decide which project to accept, the firm should rely most heavily on which one of the following analytical methods?