1.Net Present value is the present value of the cash flows subtracted from the initial investment?
2.Projects with an NPV of zero decrease shareholders'wealth by the cost of project?
3.Which of the following statements is correct for a project with a positive NPV?
IRR exceeds sthe cost of capital.,Accepting the project has as indeterminate effect on shareholders.,Tje discount rate exceeds the cost of capital., The profitablility index equals one.
4. What is the NPV of a project that costs $100,000 and returns $45,000 annually for three years if the opportunity cost of the capital is 14%?
5. The decision rule for net present value is ?
6. What will increase the NPV of a project?
7.What is the maximum that should be invested in a project at time zero if the inflows are estimated at $40,000 annually for 3 years, and the cost of capital is 9%?
8.What is the approximate IRR for a project that costs $100,000 and provides cash inflows of $30,000 fopr 6b years?
9.If the IRR for a project is 15%, then the projects NPV would be?
10.Evaluating the following project using IRR criterion based on an opportunity cost of 10% CFO=-6000, cf1=3300, cf2=3300.
11.When managers cannot determine whether to invest now or wait until costs decrease later, the rule is?
12.What is the problem imposed by capital rationing?
13.If a project has a cost of $50,000 and a profitibility index of 0.4 then?
14.Which of the following investment criteria does not take the time value of money into consideration?
book rate of return
, net present balue, profitability index, internal rate of return for borrowing projects
15.if two projects offer the same, positive NPV, would,
they also have the same IRR, they have the same payback period, they are mutually exclusive projects, the add the same amount to the value of the firm?
16. Assume your firm has anu unused machine that originally cost $75,000 has a book value of $20,000 and is currently worth $25,000. Ignoring taxes, the correct opportunity cost for this machine in capital budgeting decisions are?
17.If a project is expected to increase inventory by $15,000, increase accounts payable by $10,000 and decrease accounts receivalbe by $1,000, what effect does working capital have during the life of the project?
18.What following methods will provide a correct analysis for capital budgeting purposes?
19.Your forecast shows $500,000 annually in sales for each of the next thress years. If your second and third year predictions have failed to incorporate 5%expectd annual inflation, how far off in total dollars is your three year forecast?
expense affect investment projects by?