FIN 3403 Principles of Financial Mgmt (Spring 2015) Chapter 9 Quiz

| June 3, 2016

Question
Review Test Submission: Chapter 9 Quiz

Course Principles of Financial Mgmt [Spring 2015]

Test Chapter 9 Quiz

Started 4/2/15 11:42 AM

Results Displayed Submitted Answers

• Question 1

1 out of 1 points

An investment’s average net income divided by its average book value defines the average:

• Question 2

1 out of 1 points

The discount rate that makes the net present value of an investment exactly equal to zero is called the:

• Question 3

1 out of 1 points

The length of time required for a project’s discounted cash flows to equal the initial cost of the project is called the:

• Question 4

1 out of 1 points

The internal rate of return (IRR):

I. rule states that a project is acceptable when the IRR exceeds the required rate of return.

II. ignores the initial investment in a project.

III. is the rate that causes the net present value of a project to equal zero.

IV. can effectively be used to analyze all investment scenarios.

• Question 5

1 out of 1 points

When the present value of the cash inflows exceeds the initial cost of a project, then the project should be:

• Question 6

1 out of 1 points

An investment has the following cash flows. Should the project be accepted if it has been assigned a required return of 14 percent? Why or why not?

ercent.

• Question 7

1 out of 1 points

A project produces annual net income of $11,500, $13,700, and $16,900 over the three years of its life, respectively. The initial cost of the project is $257,000. This cost is depreciated straight-line to a zero book value over three years. What is the average accounting rate of return if the required discount rate is 6.75 percent?

• Question 8

1 out of 1 points

It will cost $3,500 to acquire a small hot dog cart. Cart sales are expected to be $1,500 a year for three years. After the three years, the cart is expected to be worthless as that is the expected remaining life of the cart. What is the payback period?

• Question 9

1 out of 1 points

The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the:

• Question 10

1 out of 1 points

You are considering the following two mutually exclusive projects. The required rate of return is 10.75 percent for project A and 12 percent for project B. Which project should you accept and why?

• Question 11

1 out of 1 points

A situation in which accepting one investment prevents the acceptance of another investment is called the:

• Question 12

0 out of 1 points

Courtney is analyzing two mutually exclusive projects of similar size and has compiled the following information based on her analysis. Both projects have four year lives.

Courtney has been asked for her best recommendation given this information. Her recommendation should be to accept:

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