7 Topic 7 Quiz
Due Nov 7 at 11:59pm Points 10 Questions 10 Available Nov 2 at 12am - Nov 7 at 11:59pm 6 days Time Limit None
This quiz was locked Nov 7 at 11:59pm.
Attempt History
Attempt Time Score
LATEST Attempt 1 11 minutes 8 out of 10
Score for this quiz: 8 out of 10
Submitted Nov 2 at 4:08pm
This attempt took 11 minutes.
Question 1 0 / 1 pts
If a project has a net present value equal to zero, then any acceleration in receiving the projected cash inflows will cause the project to have a
negative net present value.
You Answered True
Correct Answer
False
Question 2 1 / 1 pts
Deciding whether to invest in an asset is a capital budgeting decision that can be determined by using net present value analysis
Correct!
True
False
Question 3 1 / 1 pts
NPV lets you know in today's dollars how much better off or worse off you will be if you accept a project.
Correct!
True
False
Question 4 0 / 1 pts
A payback period that is more than the required period signals an accept decision.
You Answered True
Correct Answer False
Question 5 1 / 1 pts
The payback calculation takes the time value of money into account.
True
Correct!
False
Question 6 1 / 1 pts
NPV and IRR can lead to different decisions in situations where the investment decision involves mutually exclusive choices.
Correct! True
False
Question 7 1 / 1 pts
The internal rate of return (IRR) is the rate that causes the net present value of a project to exactly equal zero.
Correct! True
False
Question 8 1 / 1 pts
The following cash flows relate to a project that you are considering:
Initial investment -$300
Year 1 cash flow of $110
Year 2 cash flow $121
Year 3 cash flow $133.10
Assuming that the appropriate discount rate for the project's cash flows is 10%, what is the net present value of this project?
$19.79
$64.10
($8.58)
Correct! $0.00
$0.71
Question 9 1 / 1 pts
You are considering a project that requires an initial investment of $40,000 and will provide cash inflows of $11,000 per year for year one through
year five. What is the NPV of this project given a required return of 11.65%.
-$1,103
-$1,205
$567
$1,218
Correct! -$1.23
Question 10 1 / 1 pts
The following relates to a project that you are considering:
Project initial investment of $95,000
Year 1 cash flow $21,000
Year 2 cash flow $23,000
Year 3 cash flow $25,000
Year 4 cash flow $27,000
If the rate of return is 8%, calculate the project's Profitability Index.
0.53
1.03
Correct!
0.83
1.53
1.83
Quiz Score: 8 out of 10
