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finance homework mcq eco282

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Question;26. Which of;the following methods of evaluating capital investment projects incorporates;the time value of money concept? I) Payback Period, II) Discounted Payback;Period, III) Net Present Value (NPV), IV) Internal Rate of Return;a. I, II;and III only B. II, III, and IV only;c. III and;IV only;d. I, II;III, and IV;27. Driscoll;Company is considering investing in a new project. The project will need an;initial investment of $2,400,000 and will generate $1,200,000 (after-tax) cash;flows for three years. Calculate the IRR for the project.;a. 14.5%;b. 18.6%;c. 20.2%;D. 23.4%;28. The;following are some of the shortcomings of the IRR method except: A. IRR is;conceptually easy to communicate;b. Projects;can have multiple IRRs;c. IRR;method cannot distinguish between a borrowing project and a lending project;d. It is;very cumbersome to evaluate mutually exclusive projects using the IRR method;29. Project X;has the following cash flows: C0= +2000, C1= -1,300 and C2= -1,500. If the IRR;of the project is 25% and if the cost of capital is 18%, you would;a. Accept;the project;B. Reject the project;30. Project X;has the following cash flows: C0= +2000, C1= -1,150 and C2= -1,150. If the IRR;of the project is 9.85% and if the cost of capital is 12%, you would;A. Accept the project;b. Reject;the project;31. If the;sign of the cash flows for a project changes two times then the project has;a. One IRR;B. Two IRRs;c. Three;IRRs;d. None of;the above;32. Project Y;has following cash flows: C0 = -800, C1 = +5,000, C2 = -5,000, Calculate the;IRRs for the project;A. 25% & 400%;b. 125%;500%;c. -44%;11.6%;d. None of;the above;32;Junjie Liu ? Econ 282 Practice;Multiple Choice;33. Music;Company is considering investing in a new project. The project will need an;initial investment of $2,400,000 and will generate $1,200,000 (after-tax) cash;flows for three years. Calculate the NPV for the project if the cost of capital;is 15%.;a. $169, 935;b. $1,200,000;C. $339,870;d. $125,846;34. Muscle;Company is investing in a giant crane. It is expected to cost 6.5 million in;initial investment and it is expected to generate an end of year cash flow of;3.0 million each year for three years. Calculate the IRR approximately.;a. 14.6 %;b. 16.4 %;C. 18.2 %;d. 22.1%;35. A project;will have only one internal rate of return if;a. The net;present value is positive;b. The net;present value is negative;c. The cash;flows decline over the life of the project D. There is a one sign change in the;cash flows;36. Story;Company is investing in a giant crane. It is expected to cost 6.0 million in;initial investment and it is expected to generate an end of year cash flow of;3.0 million each year for three years. Calculate the NPV at 12%;(approximately).;a. 2.4 million;B. 1.2 million;c. 0.80;million;d. 0.20;million;37. Dry-Sand;Company is considering investing in a new project. The project will need an;initial investment of $1,200,000 and will generate $600,000 (after-tax) cash;flows for three years. Calculate the MIRR (modified internal rate of return);for the project if the cost of capital is 15%.;a. 14.5%;b. 18.6%;C. 20.2% d. 23.4%;33;Junjie Liu ? Econ 282 Practice;Multiple Choice;38. Mass;Company is investing in a giant crane. It is expected to cost 6.6 million in;initial investment and it is expected to generate an end of year cash flow of;3.0 million each year for three years. Calculate the MIRR for the project if;the cost of capital is 12% APR.;a. 17.3% B.;15.3%;c. 23.8%;d. 22.1%;39. Given the;following cash flow for project A: C0= -3,000, C1= +500, C2= +1,500 and C3=;+5,000, calculate the NPV of the project using a 15% discount rate.;a. $5,000;b. $2,352;c. $3,201;D. $1,857;40. Profitability;index is useful under: A. Capital rationing;b. Mutually;exclusive projects;c. Non-normal;projects;d. None of;the above;41. The;following table gives the available projects for a firm.;If the firm has a limit of 210 million to invest, what is;the maximum NPV the company can obtain?;a. 200;b. 283;C. 307;d. None of the above;34;Junjie Liu ? Econ 282 Practice;Multiple Choice;42. The;following table gives the available projects for a firm;The firm has only twenty million to invest. What is the;maximum NPV that the company can obtain?;a. 3.5;b. 4.0;C. 4.5;d. None of;the above;43. Benefit-cost;ratio is defined as the ratio of;a. Net;present value cash flow to initial investment B. Present value of cash flow to;initial investment;c. Net;present value of cash flow to IRR;d. Present;value of cash flow to IRR

 

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