Question : 41. In business decision-making, managers typically examine the two fundamental : 1256786

 

 

41. In business decision-making, managers typically examine the two fundamental factors of:A.  Risk and capital investment.B.  Risk and rate of return.C.  Capital investment and rate of return.D.  Risk and payback.E.  Payback and rate of return.

 

 

42. For purposes of applying the net present value and the internal rate of return methods, the rate chosen to measure the time adjusted value of money is known as the:A.  Internal rate.B.  Average rate.C.  Prime rate.D.  Discount rate.E.  Compound rate.

 

 

43. Which methods of evaluating a capital investment project ignore the time value of money?A.  Net present value and accounting rate of return.B.  Accounting rate of return and internal rate of return.C.  Internal rate of return and payback period.D.  Payback period and accounting rate of return.E.  Net present value and payback period.

 

 

 

 

44. Which methods of evaluating a capital investment project use cash flows as a measurement basis?A.  Net present value, accounting rate of return, and internal rate of return.B.  Internal rate of return, payback period, and accounting rate of return.C.  Accounting rate of return, net present value, and payback period.D.  Payback period, internal rate of return, and net present value.E.  Net present value, payback period, accounting rate of return, and internal rate of return.

 

 

45. A major limitation of the internal rate of return method is:A.  Failure to measure time value of money.B.  Failure to measure results as a percent.C.  Failure to consider the payback period.D.  Failure to reflect varying risk levels over project life.E.  Failure to compare dissimilar projects.

 

 

46. The internal rate of return method is not subject to the limitations of the net present value method when comparing projects with different amounts invested because:A.  The internal rate of return is expressed as a percent rather than the absolute dollar value of present value.B.  The internal rate of return is expressed as an absolute dollar value rather than the percent of net present value.C.  The internal rate of return reflects the time value of money rather than the absolute dollar value of present value.D.  The internal rate of return is expressed as an absolute dollar value rather than the time value of money used in net present value.E.  The internal rate of return is expressed as a percent rather than the accrual income method used in net present value.

 

 

47. A given project requires a $30,000 investment and is expected to generate end-of-period annual cash inflows as follows: 

Year 1

Year 2

Year 3

Total

$12,000

$8,000

$10,000

$30,000

Assuming a discount rate of 10%, what is the net present value of this investment?  Selected present value factors for a single sum are shown in the table below: 

= 10%

= 1

= 10%

= 2

= 10%

= 3

.9091

.8264

.7513

A.  $0.00B.  $21,000.00C.  ($7,461.00)D.  $25,033.32

E.  ($4,966.68)

 

 

48. A given project requires a $28,000 investment and is expected to generate end-of-period annual cash inflows as follows: 

Year 1

Year 2

Year 3

$12,000

$13,000

$12,000

Assuming a discount rate of 10%, what is the net present value of this investment?  Selected present value factors for a single sum are shown in the table below. 

= 10%

= 1

= 10%

= 2

= 10%

= 3

.9091

.8264

.7513

A.  $0.00B.  $2,668.00C.  ($7,461.00)D.  $30,668.00E.  ($4,966.68)

 

 

49. A given project requires a $28,500 investment and is expected to generate end-of-period annual cash inflows of $12,000 for each of three years. Assuming a discount rate of 10%, what is the net present value of this investment?  Selected present value factors for a single sum are shown in the table below: 

= 10%

= 1

= 10%

= 2

= 10%

= 3

.9091

.8264

.7513

A.  $0.00B.  $2,668.00C.  ($7,461.00)D.  $1,341.60E.  $29,841.60

 

 

 

 

 

 

 

 

 

 

 

50. A given project requires a $25,000 investment and is expected to generate end-of-period annual cash inflows as follows: 

Year 1

Year 2

Year 3

Total

$4,000

$15,000

$6,000

$25,000

Assuming a discount rate of 10%, what is the net present value of this investment?  Selected present value factors for a single sum are shown in the table below: 

= 10%

= 1

= 10%

= 2

= 10%

= 3

.9091

.8264

.7513

A.  $6,217.50B.  ($4,459.80)C.  ($6,217.50)D.  $8,275.00E.  $0.00