7 Topic 7 Quiz

Due Nov 7 at 11:59pm Points 10 Questions 10 Available Nov 2 at 12am - Nov 7 at 11:59pm 6 days Time Limit None

This quiz was locked Nov 7 at 11:59pm.

Attempt History
Attempt Time Score
LATEST Attempt 1 11 minutes 8 out of 10

Score for this quiz: 8 out of 10

Submitted Nov 2 at 4:08pm
This attempt took 11 minutes.

Question 1 0 / 1 pts

If a project has a net present value equal to zero, then any acceleration in receiving the projected cash inflows will cause the project to have a
negative net present value.

You Answered True

Correct Answer
False

Question 2 1 / 1 pts

Deciding whether to invest in an asset is a capital budgeting decision that can be determined by using net present value analysis

Correct!
True

False

Question 3 1 / 1 pts

NPV lets you know in today's dollars how much better off or worse off you will be if you accept a project.

Correct!
True

False

Question 4 0 / 1 pts

A payback period that is more than the required period signals an accept decision.

You Answered True

Correct Answer False

Question 5 1 / 1 pts

The payback calculation takes the time value of money into account.

True

Correct!
False
 Question 6 1 / 1 pts

NPV and IRR can lead to different decisions in situations where the investment decision involves mutually exclusive choices.

Correct! True

False

Question 7 1 / 1 pts

The internal rate of return (IRR) is the rate that causes the net present value of a project to exactly equal zero.

Correct! True

False

Question 8 1 / 1 pts

The following cash flows relate to a project that you are considering:

Initial investment -$300

Year 1 cash flow of $110
Year 2 cash flow $121
Year 3 cash flow $133.10

Assuming that the appropriate discount rate for the project's cash flows is 10%, what is the net present value of this project?

$19.79

$64.10

($8.58)

Correct! $0.00

$0.71

Question 9 1 / 1 pts

You are considering a project that requires an initial investment of $40,000 and will provide cash inflows of $11,000 per year for year one through
year five. What is the NPV of this project given a required return of 11.65%.

-$1,103

-$1,205

$567

$1,218

Correct! -$1.23

Question 10 1 / 1 pts

The following relates to a project that you are considering:

Project initial investment of $95,000

Year 1 cash flow $21,000
Year 2 cash flow $23,000
Year 3 cash flow $25,000
Year 4 cash flow $27,000
 If the rate of return is 8%, calculate the project's Profitability Index.

0.53

1.03

Correct!
0.83

1.53

1.83

Quiz Score: 8 out of 10