Question : 61.Findell Corporation considering two projects, A and B, and it : 1257026

 

 

61.Findell Corporation is considering two projects, A and B, and it has gathered the following estimates for the project  What is the present value index for project A?   

A. 1.096

 

B. 1.124

 

C. 0.889

 

D. 0.913

 

 

62.Young Corporation is considering purchasing equipment that costs $80,000 and is expected to provide the following cash inflows over its five-year useful life:  What is the payback period of this investment project (rounded to the nearest year)?   

A. 2 years

 

B. 4 years

 

C. 3 years

 

D. 6 years

 

 

63.Capital investment decisions involve all of the following, except:   

A. the acquisition of short-term operational assets.

 

B. projects requiring relatively long periods of time and large cash flows.

 

C. the acquisition of long-term operational assets.

 

D. none of these answers is correct.

 

 

64.A series of equal cash flows at fixed intervals is termed a(n):   

A. net cash flow.

 

B. lump sum.

 

C. annuity.

 

D. return on investment.

 

 

65.Which method for evaluating capital investment proposals reduces the present value of cash outflows from the present value of cash inflows?   

A. Payback method

 

B. Internal rate of return

 

C. Net present value

 

D. Unadjusted rate of return

 

 

66.Which of the following are not present value methods of analyzing capital investment proposals?   

A. Internal rate of return and payback

 

B. Unadjusted rate of return and net present value

 

C. Net present value and payback

 

D. Payback and unadjusted rate of return

 

 

67.Which of the following is not a criteria that is used to determine whether a project is acceptable under the net present value method?   

A. If the net present value is equal to zero

 

B. If the net present value is greater than zero

 

C. If the net present value is equal to the required rate of return

 

D. None of these answers is correct.

 

 

68.Joan Osborne is evaluating a potential capital investment. She has calculated the net present value using a minimum rate of return of 10%. Using this rate, the net present value is negative. What does this tell her about the rate of return expected for the project?   

A. If the net present value is negative; the expected rate of return for the project is greater than the 10% minimum or required rate of return.

 

B. If the net present value is negative; the expected rate of return for the project is less than the 10% minimum or required rate of return.

 

C. If the net present value is negative; the expected rate of return for the project is equal to the 10% minimum or required rate of return.

 

D. None of the other answers are correct.

 

 

69.Which method of evaluating capital investment decisions uses the concept of present value to compute a rate of return?   

A. Internal rate of return

 

B. Unadjusted rate of return

 

C. Net present value

 

D. Payback

 

 

70.Cash inflows generated by capital investments include all of the following except:   

A. incremental revenues.

 

B. cost savings.

 

C. reduction in the amount of required working capital.

 

D. increase in operating expenses.

 

 

 

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