Net Present Value and Correct Answer - 2705 Words

Question 1 2 out of 2 points | | | Assume that the economy is in a mild recession, and as a result interest rates and money costs generally are relatively low. The WACC for two mutually exclusive projects that are being considered is 8%. Project S has an IRR of 20% while Project L s IRR is 15%. The projects have the same NPV at the 8% current WACC. However, you believe that the economy is about to recover, and money costs and thus your WACC will also increase. You also think that the projects will not be funded until the WACC has increased, and their cash flows will not be affected by the change in economic conditions. Under these conditions, which of the following statements is CORRECT?Answer | | | | | Selected Answer: |†¦show more content†¦| Correct Answer: | The higher the WACC used to calculate the NPV, the lower the calculated NPV will be. | | | | | Question 8 2 out of 2 points | | | Which of the following statements is CORRECT?Answer | | | | | Selected Answer: | An NPV profile graph is designed to give decision makers an idea about how a project’s contribution to the firm’s value varies with the cost of capital. | Correct Answer: | An NPV profile graph is designed to give decision makers an idea about how a project’s contribution to the firm’s value varies with the cost of capital. | | | | | Question 9 2 out of 2 points | | | Which of the following statements is CORRECT?Answer | | | | | Selected Answer: | If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the lower IRR probably has more of its cash flows coming in the later years. | Correct Answer: | If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the lower IRR probably has more of its cash flows coming in the later years. | | | | | Question 10 2 out of 2 points | | | Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series ofShow MoreRelatedNet Present Value and Correct Answer850 Words   |  4 Pagespoints) Which of the following NOT correct? Independent or non-mutually exclusive alternatives can be accepted at the same time. The modified internal rate of return assumes that inflow are reinvested at 80 percent of the internal rate of return This is a correct answer It is the difference in the reinvestment assumptions that can be significant in determining when to use the present value or internal rate of return methods. Under the net present value method, cash flows are assumedRead MoreValuation Quiz Essay1381 Words   |  6 PagesPamp;S’s current equity value (rounded to the nearest million dollars). You Answered Correct Answer 5676  margin of error  +/-  2    Question 2 Swamp amp; Sand Industries has the following data. The discount rate is 12%. Terminal value is 3 times FCF. Cash and debt are constant.    Calculate its Enterprise Value.       | 20X1 | 20X2 | 20X3 | Free Cash Flow |   1933 |   1933 |   1933 | Cash |   147 |   147 |   147 | Debt |   435 |   435 |   435 | You Answered Correct Answer 8762.3  margin of error  +/-  3 Read MoreQuiz 7 Cost Accounting1450 Words   |  6 Pagesfacilities? A) capital budgeting B) working capital C) master budgeting D) project-cost budgeting Answer: A Diff: 1 Terms: capital budgeting Objective: 1 AACSB: Reflective thinking 2) The two factors capital budgeting emphasizes are: A) qualitative and nonfinancial B) quantitative and nonfinancial C) quantitative and financial D) qualitative and financial Answer: C Diff: 1 Terms: capital budgeting Objective: 2 AACSB: Reflective thinking 3) The stage of theRead MoreEco 550 Quiz 1 (2013) Essay examples691 Words   |  3 Pagesbe designed to: Correct Answer: create incentives so that managers act like owners of the firm. Question 2 3 out of 3 points In the shareholder wealth maximization model, the value of a firms stock is equal to the present value of all expected future ____ discounted at the stockholders required rate of return. Correct Answer: profits (cash flows) Question 3 3 out of 3 points The primary objective of a for-profit firm is to ___________. Correct Answer: maximize shareholderRead MoreAcc/561 Exam Essay1444 Words   |  6 Pages| | Multiple Choice Question 49 | | | | Your answer is correct. |    |    | Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? | Reduced legal liability for investors. | | Harder to transfer ownership. | | Lower taxes. | | Most common form of organization. | | | | | Multiple Choice Question 64 | | | | Your answer is correct. |    |    | The group of users of accounting information charged withRead MoreEssay Mid-Term Exam Busn 3791364 Words   |  6 PagesQuestion Type: # Of Questions: # Correct: Multiple Choice 31 29 Many Multiple Choice 1 0 Short 4 N/A Grade Details - All Questions Page: 1 2 3 1. Question : (TCO 1) What is the goal of financial management for a sole proprietorship? Student Answer: Decrease long-term debt to reduce the risk to the owner maximize net income given the resources of the firm CORRECT maximize the market value of the equity minimize the tax impact on the proprietor minimize costsRead MoreAccounts Receivable and Correct Marks1036 Words   |  5 PagesChoose one answer. | a. Recording interest that has been earned but not received | | | b. Recording supplies that have been purchased with cash but not yet used. | | | c. Recording revenue that has been earned but not yet collected in cash. | | | d. A. and C. | | Correct Marks for this submission: 5/5. Question 2 Marks: 5 Which resource provider typically receives first priority when resources are divided as part of a business s liquidation? Choose one answer. | aRead MoreReal Option956 Words   |  4 PagesSome questions may require you to use financial calculator or Excel. (In the final exam, for students without financial calculator, writing down the formula will be enough. However, those formulas must be correct to get full credit. Therefore, it is a good practice to check whether you are correct by using Excel for these practice questions) 1. How are real options different from financial options? 2. Consider the following project data: (1) A $500 feasibility study will be conductedRead MoreFin 571 Week 5 Connect Problems1026 Words   |  5 Pages1. The difference between the present value of an investment?s future cash ï ¬â€šows and its initial cost is the: †¢ net present value. †¢ internal rate of return. †¢ payback period. †¢ proï ¬ tability index. †¢ discounted payback period. 2. Which statement concerning the net present value (NPV) of an investment or a ï ¬ nancing project is correct? †¢ A ï ¬ nancing project should be accepted if, and only if, the NPV is exactly equal to zero. †¢ An investment project should be accepted only if the NPV is equalRead MoreSterling Household Products Company651 Words   |  3 PagesPlease provide an articulate, concise, and theoretically sound answer. Answers need to be supported with examples from the texts and Exhibits. This may require some due diligence on your part. Please retype the question and your response. 1. How much business risk is associated with Sterling’s proposed acquisition of the germicidal, sanitation, and antiseptic products unit of Montagne Medical? Be sure to define business risk in your answer. 2. Verify the growth rates for sales and inflation