Question :
51.Which of the following an objective of capital budgeting?
A. To eliminate : 1258749
51.Which of the following is an objective of capital budgeting?
A. To eliminate all risk.
B. To discount all future and past cash flows.
C. To earn a satisfactory return on investment.
D. To reverse past decisions.
E. To reduce the number of investment activities.
52.The time value of money concept:
A. Means that a dollar today is worth less than a dollar tomorrow.
B. Means that a dollar tomorrow is worth more than a dollar today.
C. Means that a dollar today is worth more than a dollar tomorrow.
D. Means that “Time is money.”
E. Does not involve the concept of compound interest.
53.A minimum acceptable rate of return for an investment decision is called the:
A. Internal rate of return.
B. Average rate of return.
C. Hurdle rate of return.
D. Maximum rate of return.
E. Payback rate of return.
54.The rate that yields a net present value of zero for an investment is the:
A. Internal rate of return.
B. Accounting rate of return.
C. Net present value rate of return.
D. Zero rate of return.
E. Payback rate of return.
55.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.
56.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.
57.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.
58.A given project requires a $30,000 investment and is expected to generate end-of-period annual cash inflows as follows:
Year 1Year 2Year 3Total
$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:
i= 10%n = 1i= 10%n = 2i= 10%n = 3
.9091.8264.7513
A. $0.00
B. $21,000.00
C. ($7,461.00)
D. $25,033.32
E. ($4,966.68)
59.A given project requires a $28,000 investment and is expected to generate end-of-period annual cash inflows as follows:
Year 1Year 2Year 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.
i= 10%n = 1i= 10%n = 2i= 10%n = 3
.9091.8264.7513
A. $0.00
B. $2,668.00
C. ($7,461.00)
D. $30,668.00
E. ($4,966.68)
60.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:
i= 10%n = 1i= 10%n = 2i= 10%n = 3
.9091.8264.7513
A. $0.00
B. $2,668.00
C. ($7,461.00)
D. $1,341.60
E. $29,841.60
