Question 21 of 30 < > View Policies Current Attempt in Progress Which of the following capital budgeting technique ignores the time value of money? O Modified internal rate of return O Net present value Discounted payback period O Payback period eTextbook and Media -/0.1 E Save for Later Attempts: 0 of 3 used Submit Answer Using multiple attempts will impact your score. 20% score reduction after attempt 2
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- Which capital budgeting projects are ?preferred اخترأحد الخیارات a. Higher payback period O b. None of the option O c. Average payback period O d. Lower payback period O e. Lower cash inflow projectsConsider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Discount Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate A – 100 40 50 60 N/A 0.1 В - 73 30 30 30 30 0.1 The net present value (NPV) of project B is closest to: А. 24.3 В. 55.2 С. 27.6 D. 22.1Answer the following fast- A. Task whose incomes are adequate to compensate capital contributed for pace of return at that point net present worth will be A. negative B. zero C. positive D. autonomous B. Present estimation of future incomes is Rs 2000 and an underlying expense is Rs 1100 then benefit file will be A. 55.00% B. 1.82 C. 0.55 D. 1.82% C. Benefit record in capital planning is utilized for A. negative undertakings B. relative undertakings C. assess projects D. acquired tasks D. Different elements held steady, more prominent venture liquidity is a result of A. less undertaking return B. more prominent venture return C. more limited compensation period D. more prominent restitution period E. In count of inside pace of return, a supposition expresses that got income from project must A. be reinvested B. not be reinvested C. be acquired D. not be acquired F. In capital planning, number…
- Which of the following is/are true for the average accounting return method of project analysis? I. does not need a cutoff rate II. ignores time value of money II. is based on project's cash flows IV. easily obtainable information for computation Multiple Choice I only I, II, II, and IV1 2 The following cash flow pattern has two IRRs. Use Excel to draw a graph of the NPV of these cash flows as a function of the discount rate. Then use the IRR function to identify the two IRRS. Would you invest in this project if the opportunity cost were 30%? 3 Discount rate 10.00% -34.96 Data table 4 NPV S Year Cash flow 6 7 0 -300 8 1 300 9 2 200 10 3 150 11 4 122 12 5 133 13 6 -800 14 15 IRR 1 16 IRR2 17 18 19 + ? ?Activity 3 You are given the following information on three funds. The risk free rate is 6%. Calculate the differential return measure. Interpret your findings. Fund CH- G I Actual Return 15 25 30 Market Return 20 20 20 Sigma² 16 25 36
- rayer.sop - PRACTICE MILESTONE 1 A Practice Milestone PDF 8. 10 11 12 13 14 15 16 17 O This is a practice Milestone and does not count towar Question Unit 1 Tutorials Question 1 The purpose of finance is to create maximum value through informed resource decisions understand how and why markets change Oeliminate all risk and uncertainty when it comes to investing assets O make as much money as possible over the long-term SAVE AND CONTINUE earchComplete the following 6 Wk 3 Financial Exercises: Problem Set 1, Part 2 problems: 1. Calculate the net present value (NPV) of the following cash flow stream if the required rate is 12%: Insert your NPV calculation. Year Cash Flow Is this a good project for the business to accept? Explain why or why not. Insert your answer. 2. Calculate the NPV of the following cash flow projections based on a required rate of 10.5%: Insert your NPV calculation. Year Cash Flow Is this a good project for the business to accept? Explain why or why not. Insert your answer. 3. A company needs to decide if it will move forward with 2 new products that it is evaluating. The 2 initiatives have the following cash flow projections: Project A Project B Year Cash Flow Year Cash Flow Based on the risk of each project, the company has a required rate of return of 11% for Project A and 11.5% for Project B. The company has a $1.5 million budget to spend on new projects for the year. Should the company move forward…Marginal analysis and capital budgeting decisions. A company faces the following schedule of potential investment projects (all assumed to be equal risk). Use marginal analysis to decide which projects should NOT be undertaken? Expected Rate of Return (%) Project alm|0|n|u|u A B с D E F CH G 1 Investment Required ($ million) 25 15 40 35 12 20 18 13 7 OF and G OH and I OF, G, H, and I 01 OG, H, I 27 24 21 18 15 14 13 11 8 Cumulative Investment The following is the cost of acquiring the funds needed to finance these investment projects. Cost of Capital (%) Block of funds ($ million) First 50 10 Next 25 10.5 11 Next 40 Next 50 12.2 Next 20 14.5 25 40 80 115 127 147 165 178 185 50 75 115 165 185 Cumulative Funds Raised
- 5. LL Consider the following cash flows of a project: Year Year 1. 50 0. 2. 3. 4. 1. Find the internal rate of return for this investment. 0. 20. Multiple Choice < Prev 10 of 15 Next here to search F11 F12 F4 F5 69 81 9F-Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 -24,063 -24,063 1 10,320 12,063 2 10,900 9,360 3 10,800 10,400 Sketch the NPV profiles for X and Y over a range of discount rates from zero to 25 percent (take 0%, 5%, 10%, 15%, 20%, 25%). Calculate the IRR of the projects. What is the relationship between NPV and IRR for your values? What is the crossover rate for these two projects and what it indicates for your values? Note - answer all the parts of the question.The capital budgeting decision that requires a choice between two decisions is a(n) _______ project. Independent Dependent Mutually exclusive Inclusive The actual value that a firm loses when it makes a capital budgeting decision is a(n) ______ cost Fixed Opportunity Sample Unknown The number of years required for an investment to return the monies invested is known as a projects Economic life Usage rate Capital decision Payback period The future benefits received from investing in a project are the projects Net cash flows Net investment Net cost Net return The capital components included in a firms weighted cost of capital are Common stock Debt Retained earnings All of the above Weaknesses in using solely the payback method as a measure of a projects risk include Not accounting for the time value of money There is no objective criterion for deciding what is an acceptable payback period Cash flows that occur after the payback period have no impact on the…
