Exam 9: Net Present Value and Other Investment Criteria

A) I only
B) I and III only
C) II and IV only
D) I, II, and III only
E) I, II, III, and IV

Correct Answer

verified

Show Answer

Correct Answer

verified

For financing type projects,the decision...

View Answer

Show Answer

A) Yes; The MIRR is 8.81 percent.
B) Yes; The MIRR is 9.23 percent.
C) No; The MIRR is 8.81 percent.
D) No; The MIRR is 9.06 percent.
E) No; The MIRR is 9.23 percent.

Correct Answer

verified

Show Answer

A) No; The IRR exceeds the required return by about 0.06 percent.
B) No; The IRR is less than the required return by about 1.53 percent.
C) Yes; The IRR exceeds the required return by about 0.06 percent.
D) Yes; The IRR exceeds the required return by about 1.53 percent.
E) Yes; The IRR is less than the required return by about 0.06 percent.

Correct Answer

verified

Show Answer

A) 6.42 percent
B) 7.03 percent
C) 7.48 percent
D) 8.22 percent
E) 8.56 percent

Correct Answer

verified

Show Answer

A) is the best method of analyzing mutually exclusive projects.
B) is less useful than the internal rate of return when comparing different sized projects.
C) is the easiest method of evaluation for non-financial managers to use.
D) is less useful than the profitability index when comparing mutually exclusive projects.
E) is very similar in its methodology to the average accounting return.

Correct Answer

verified

Show Answer

A) You should accept Project A and reject Project B based on their respective NPVs.
B) You should accept Project B and reject Project A based on their respective NPVs.
C) You should accept Project A and reject Project B based on their respective IRRs.
D) You should accept Project B and reject Project A based on their respective IRRs.
E) You should accept both projects based on both the NPV and IRR decision rules.

Correct Answer

verified

Show Answer

A) 6.94 percent
B) 13.88 percent
C) 15.66 percent
D) 27.75 percent
E) 31.31 percent

Correct Answer

verified

Show Answer

A) -$1,574.41
B) -$1,208.19
C) $5,904.65
D) $6,029.09
E) $6,311.16

Correct Answer

verified

Show Answer

A) would commence on the same day.
B) have the same initial start-up costs.
C) both require the total use of the same limited resource.
D) both have negative cash outflows at time zero.
E) have the same life span.

Correct Answer

verified

Show Answer

A) constant dividend growth model
B) discounted cash flow valuation
C) average accounting return
D) expected earnings model
E) internal rate of return

Correct Answer

verified

Show Answer

A) accept Project A and reject Project B
B) reject Project A and accept Project B
C) accept both Projects A and B
D) reject both Projects A and B
E) You cannot make this decision based on net present value analysis.

Correct Answer

verified

Show Answer

A) It considers the time value of money.
B) It measures net income as a percentage of the sales generated by a project.
C) It is the best method of analyzing mutually exclusive projects from a financial point of view.
D) It is the primary methodology used in analyzing independent projects.
E) It can be compared to the return on assets ratio.

Correct Answer

verified

Show Answer