Question : 45.In which of the following situations will an annuity table : 1302826

45.In which of the following situations will an annuity table be useful?

I.Calculating the net present value of an investment with equal cash flows for the first nine years, but a different flow in year 10

II.Calculating the internal rate of return of an investment with unequal cash flows each year

III.Calculating the net present value of an investment with an equal cash flow in years one through four, and a different equal cash flow in years 5 through 10

A.I, II, and III

B.II and III

C.I and III

D.I and II

46.What is the present value factor for a $4,000 cash outflow that is made today?

A.0.00

B.Some value greater than 1.00

C.1.00

D.It depends on the rate of return that is required.

47.If the time value of money techniques are used correctly, the present value of cash flows far in the future will be

A.lesser than the present value of the same amount of cash flows in the present.

B.greater than the present value of the same amount of cash flows in the present.

C.same as the future value of the same amount of cash flows in the present.

D.greater than the future value of the same amount of cash flows in the present.

48.An annuity is

A.the time period in which the cash flows paid out for an investment will be recovered.

B.a series of equal payments.

C.necessary in order to calculate the net present value.

D.used to calculate depreciation in order to provide a tax shield.

49.If a 14% rate of return can be achieved, how much will need to be invested today in order to receive $12,000 at the end of 3 years plus $10,000 at the end of 5 years? Round to the nearest whole number.

A.$33,053

B.$5,194

C.$11,426

D.$13,294

50.To achieve exactly a 13% rate of return, how much would need to be invested today in an investment that returns $12,000 at the end of 3 years and $10,000 at the end of 5 years? Round to the nearest whole number.

A.$8,239

B.$13,745

C.$12,862

D.$60,920

51.Which of the following is not one of the steps in the net present value method?

A.Identify the amount and timing of the cash flows.

B.Discount the cash flows.

C.Calculate the number of years required to recover the initial investment.

D.Compare the discounted net cash flows to zero.

52.What is the sum of the present values of all cash flows (inflows and outflows) called?

A.Cost of capital

B.Internal rate of return

C.Net present value

D.Required rate of return

53.Projects A and B both have an initial outflow of $100,000. Project A will return a cash flow of $30,000 each year for the next 5 years. Project B will return $40,000 in year 1, $30,000 in year 2, $30,000 in year 3, $30,000 in year 4, and $20,000 in year 5. Which project will have the higher net present value?

A.Project A

B.Project B

C.The answer cannot be determined without knowing the required rate of return.

D.The answer cannot be determined without knowing the initial investment.

54.Projects with a negative net present value will always have a(n)

A.payback period longer than the useful life of the investment.

B.internal rate of return that is less than the required rate of return.

C.accounting rate of return that is negative.

D.series of cash outflows that is greater than the initial cost of the project.