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A. Which of the following investment ranking metho...

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A. Which of the following investment ranking methods does not consider the time value of money? net present value method payback method internal rate of return method all of these are time-adjusted methods B.You can ensure that an investment is expected to create value for: have a PI equal to zero. produce negative rates of return. have positive AARs. have positive IRRs. have positive NPVs. C.What is the net present value of a project with the following cash flows, if the discount rate is 15 percent? -$2,989.48 -$2,599.55 $1,153.37 $2,880.08 $3,312.09 D.The Inventive Co. is considering a new project. This project requires an initial cash investment of $70,000. The project will generate cash inflows of $10,500 in the first year. Then, the project will do nothing for two years, after which time cash inflows of $25,000 will be generated for four years. How long will it take the Inventive Co. to recover its $70,000 investment? 5.16 years 5.38 years 6.11 years 6.62 years 6.94 years E.The postponement of a project until conditions are more favorable: is a valuable option. is referred to as the option to extend. could not cause a negative net present value project to become a positive net present value project. will generally cause the internal rate of return for a project to decline. F ____________, refers to the situation a firm faces when it has positive net present value projects, but cannot obtain financing for those projects. capital planning. soft rationing. capital rationing. hard rationing. a sunk cause. G. ABC Cameras is considering an investment that will have a cost of $10,000 and the following cash flows: $6,000 in year 1, $4,000 in year 2 and $3,000 in year 3. Assume the cost of capital is 10%. Which of the following is true regarding this investment? The net present value of the project is $11,000 This project should be accepted because it has a negative net present value This project should be accepted because it has a payback higher than 3 years The net present value of the project is close to $1,000 H.Assume a corporation has earnings before depreciation, and taxes of $100,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company? $82,000 $110,000 $42,000 none of these I.Which of the following factors will affect the expected rate of return on a security? multiple states of the economy probability of occurrence for any one economic state market rate of return given a particular economic state all of the above will affect the expected rate of return J. Which statement is not true regarding risk? the expected return is always the same as the actual return a key to assess risk is determining how much risk an investment adds to a portfolio risks can not always be diversified the higher the risk, the higher the return investors require for the investment K.The stock of Uptown Men's Wear is expected to produce the following returns, given the various states of the economy. What is the expected return on this stock? 9.6 percent 10.4 percent 12.8 percent 13.6 percent 15.3 percent L.You own a portfolio that consists of $8,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of stock D? 17.68 percent 17.91 percent 18.42 percent 19.07 percent 19.46 percent M. You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. The one stock has a beta of .80. What does the beta of the second stock have to be if you want the portfolio risk to equal that of the overall market? 1.4 1.6 1.8 2.0 2.2

 

Paper#7091 | Written in 18-Jul-2015

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