CFIN ACTUAL 2026 TEST PAPER QUESTIONS AND
SOLUTIONS RATED A+
✔✔The size, duration, return and timing of return are all variables common to all
investments.
Select one:
a. TRUE
b. FALSE - ✔✔A. True
✔✔By selecting the proportions of debt and equity in the most efficient way, a manager
can add value to the firm.
Select one:
a. TRUE
b. FALSE - ✔✔A. True
✔✔To determine cash flow depreciation is
Select one:
a. subtracted from net income
b. added to net income
c. neither added nor subtracted from net income - ✔✔b. added to net income
✔✔Capital budgeting includes brainstorming and continues through the analysis of the
investment after it has been brought on line.
Select one:
a. TRUE
b. FALSE - ✔✔a. True
✔✔Which of the following techniques does not account for the time value of money?
Select one:
a. IRR
b. payback
c. NPV
d. present value payback - ✔✔b. payback
✔✔The payback method accounts for the time value of money.
Select one:
a. TRUE
b. FALSE - ✔✔b. false
✔✔NPV reports in present dollar terms how much value will be added to a company as
a result of making a particular investment.
Select one:
a. TRUE
b. FALSE - ✔✔a. True
, ✔✔The internal rate of return is the discount factor necessary to make an investment's
NPV greater than one.
Select one:
a. TRUE
b. FALSE - ✔✔b. false
✔✔Which of the following discounted cash flow techniques matches the present value
with the future value so that the net result is zero ?
Select one:
a. NPV
b. IRR
c. discounted payback
d. present value index - ✔✔b. IRR
✔✔Which of the following is a benefit in a capital budgeting incremental analysis?
Select one:
a. Cost savings over old asset
b. Depreciation lost from sale of old asset
c. Major overhauls
d. None of the above - ✔✔a. Cost savings over old asset
✔✔The ITC in capital budgeting analysis is
Select one:
a. A Cost
b. A benefit
c. Neither A nor B - ✔✔b. a benefit
✔✔In a capital budgeting analysis, taxes may be
Select one:
a. a cost
b. a benefit
c. both A and B
d. neither A nor B - ✔✔c. both A and B
✔✔Higher dividends do not necessarily result in higher costs of equity.
Select one:
a. TRUE
b. FALSE - ✔✔a. True
✔✔If market interest rates fall, the market will place a discount on bonds which have
coupon rates that are higher than the market interest rate.
Select one:
a. TRUE
SOLUTIONS RATED A+
✔✔The size, duration, return and timing of return are all variables common to all
investments.
Select one:
a. TRUE
b. FALSE - ✔✔A. True
✔✔By selecting the proportions of debt and equity in the most efficient way, a manager
can add value to the firm.
Select one:
a. TRUE
b. FALSE - ✔✔A. True
✔✔To determine cash flow depreciation is
Select one:
a. subtracted from net income
b. added to net income
c. neither added nor subtracted from net income - ✔✔b. added to net income
✔✔Capital budgeting includes brainstorming and continues through the analysis of the
investment after it has been brought on line.
Select one:
a. TRUE
b. FALSE - ✔✔a. True
✔✔Which of the following techniques does not account for the time value of money?
Select one:
a. IRR
b. payback
c. NPV
d. present value payback - ✔✔b. payback
✔✔The payback method accounts for the time value of money.
Select one:
a. TRUE
b. FALSE - ✔✔b. false
✔✔NPV reports in present dollar terms how much value will be added to a company as
a result of making a particular investment.
Select one:
a. TRUE
b. FALSE - ✔✔a. True
, ✔✔The internal rate of return is the discount factor necessary to make an investment's
NPV greater than one.
Select one:
a. TRUE
b. FALSE - ✔✔b. false
✔✔Which of the following discounted cash flow techniques matches the present value
with the future value so that the net result is zero ?
Select one:
a. NPV
b. IRR
c. discounted payback
d. present value index - ✔✔b. IRR
✔✔Which of the following is a benefit in a capital budgeting incremental analysis?
Select one:
a. Cost savings over old asset
b. Depreciation lost from sale of old asset
c. Major overhauls
d. None of the above - ✔✔a. Cost savings over old asset
✔✔The ITC in capital budgeting analysis is
Select one:
a. A Cost
b. A benefit
c. Neither A nor B - ✔✔b. a benefit
✔✔In a capital budgeting analysis, taxes may be
Select one:
a. a cost
b. a benefit
c. both A and B
d. neither A nor B - ✔✔c. both A and B
✔✔Higher dividends do not necessarily result in higher costs of equity.
Select one:
a. TRUE
b. FALSE - ✔✔a. True
✔✔If market interest rates fall, the market will place a discount on bonds which have
coupon rates that are higher than the market interest rate.
Select one:
a. TRUE
