FIN 6100 Exam 3 Questions & Answers, Well
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Practice questions for this set
Learn 1 /7 Study with Learn
1. scenario analysis
2. sensitivity analysis
3. breakeven analysis
Choose an answer
what are three methods for
1 2 What is cash flow?
evaluating a project?
If you are expecting positive cash Pros and Cons of the Payback
3 flows, do you want to use MACRS 4 period method
or straight line depreciation? (2, 4)
Don't know?
, Terms in this set (55)
What is cash flow? the cash available to return to investors and other
sources of financing.
what are the 3 main rules of cash 1. based on Net/after tax cash flows
flows?
2. Always adjust for the time value of money
3. must include all cash flows related, including
opportunity costs.
What are decision rules? methods that we use in the evaluation of projects
to see what we want to invest in
5 types of decision rules 1. Payback Period
2. Discounted Payback Period
3. IRR
4. NPV
5. Profitability index
Pros and Cons of the Payback Pros:
period method - focus on recovering funds quickly
(2, 4) - easy to understand/teach
Cons:
- short term focus at the expense of long term
profit
- ignores timing and the magnitude of later cash
flows.
- ignores risk
- doesn't allow ranking
What does it mean if the IRR is that we are earning more than what it costs us.
larger than the WACC? Making profit.
Elaborated | Already Verified Test |100% Verified
solutions |2026 Latest!!
Save
Practice questions for this set
Learn 1 /7 Study with Learn
1. scenario analysis
2. sensitivity analysis
3. breakeven analysis
Choose an answer
what are three methods for
1 2 What is cash flow?
evaluating a project?
If you are expecting positive cash Pros and Cons of the Payback
3 flows, do you want to use MACRS 4 period method
or straight line depreciation? (2, 4)
Don't know?
, Terms in this set (55)
What is cash flow? the cash available to return to investors and other
sources of financing.
what are the 3 main rules of cash 1. based on Net/after tax cash flows
flows?
2. Always adjust for the time value of money
3. must include all cash flows related, including
opportunity costs.
What are decision rules? methods that we use in the evaluation of projects
to see what we want to invest in
5 types of decision rules 1. Payback Period
2. Discounted Payback Period
3. IRR
4. NPV
5. Profitability index
Pros and Cons of the Payback Pros:
period method - focus on recovering funds quickly
(2, 4) - easy to understand/teach
Cons:
- short term focus at the expense of long term
profit
- ignores timing and the magnitude of later cash
flows.
- ignores risk
- doesn't allow ranking
What does it mean if the IRR is that we are earning more than what it costs us.
larger than the WACC? Making profit.
