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Question;46. Which of the following statements is;true regarding the payback period?;A. The time value of money is considered;when calculating the payback.;B. The payback analysis is more accurate;than the net present value analysis.;C. The payback period is less accurate than;the accounting rate of return.;D. The time value of money is not;considered when calculating the payback.;Boccardi Inc., has invested in new pasta;manufacturing equipment at a cost of $48,000. The equipment has an estimated;useful life of eight years. Estimated annual sales and operating expenses;related to the pasta equipment follow;47. The estimated payback of the investment;in the pasta equipment is;A. 3.0 years.;B. 4.0 years.;C. 6.0 years.;D. 8.0 years.;48. The estimated accounting rate of return;is;A. 12.5%.;B. 18.0%.;C. 25.0%.;D. 33.3%.;49. In a capital budgeting decision, if a;firm uses the net present value method and a 12% discount rate, what does a;negative net present value indicate?;A. The proposal's rate of return exceeds;12%.;B. The proposal's rate of return is less;than the minimum rate required.;C. The proposal earns a rate of return;between 10% and 12%.;D. None of the above.;50. A capital budgeting decision method;that considers the time value of money is the;A. accounting rate of return method.;B. return on stockholders' equity method.;C. cash payback method.;D. internal rate of return method.;51. Which of the following is a true;statement regarding the internal rate of return in capital budgeting?;A. It provides the same basic information;as the net present value method.;B. It calculates the net present value of;future cash flows.;C. It calculates the proposal's rate of;return.;D. It doesn't consider the time value of;money.;52. Which of the following is a true;statement regarding the net present value method in capital budgeting?;A. It provides the same basic information;as the accounting rate of return.;B. It calculates the present value of;future cash flows.;C. It calculates the proposal's rate of;return.;D. It doesn't consider the time value of;money.;53. Sometimes when management decisions are;reached the investment project with the highest NPV or IRR is not selected.;This occurs because;A. a lower IRR is a less risky investment.;B. the highest NPV is not necessarily the;highest IRR.;C. qualitative factors override;quantitative analysis techniques.;D. sometimes management makes the wrong;decision.

Paper#44945 | Written in 18-Jul-2015

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