BFIN 300 Final Test Questions with 100%
Correct Answers
You purchase a run-down home in Albany for $25,000 and spend another $25,000 to
repair it. Your total in-cost is $50,000. When the work is done, you place the home back
on the market and find that it's worth $60,000. What is your NPV?
A. Zero
B. $10,000
C. $25,000
D. $50,000
E. $60,000
B. $10,000
What is the difference between an investment's market value and cost?
A. Internal Rate of Return (IRR)
B. Net Present Value (NPV)
C. Capital Budgeting Process
D. Discounted Cash Flow (DCF)
E. All of the above
B. Net Present Value
As a financial manager, what will you do with an investment if its Net Present Value
(NPV) is negative?
A. Estimate the cash flows of the business
B. Reject the investment
C. Accept the investment
, D. Be agnostic with the investment
E. None of the above
B. Reject the investment
Which investment technique yields the same result as Net Present Value (NPV)?
A. Payback rule
B. Discounted Payback Period
C. Internal Rate of Return
D. Average Accounting Return
E. Profitability Index
C. Internal Rate of Return
Which statement is true regarding the Internal Rate of Return (IRR)?
A. It is the most important alternative to Net Present Value
B. The IRR is a single rate of return which summarizes the merits of the project
C. It is the discount rate which makes the Net Present Value of an investment equate to
zero
D. An investment is acceptable if its IRR exceeds the required return
E. All of the above
E. All of the above
What is the best definition of an opportunity cost?
A. Sunk cost
B. Erosion
C. The most valuable investment alternative given up if a particular investment is
undertaken
Correct Answers
You purchase a run-down home in Albany for $25,000 and spend another $25,000 to
repair it. Your total in-cost is $50,000. When the work is done, you place the home back
on the market and find that it's worth $60,000. What is your NPV?
A. Zero
B. $10,000
C. $25,000
D. $50,000
E. $60,000
B. $10,000
What is the difference between an investment's market value and cost?
A. Internal Rate of Return (IRR)
B. Net Present Value (NPV)
C. Capital Budgeting Process
D. Discounted Cash Flow (DCF)
E. All of the above
B. Net Present Value
As a financial manager, what will you do with an investment if its Net Present Value
(NPV) is negative?
A. Estimate the cash flows of the business
B. Reject the investment
C. Accept the investment
, D. Be agnostic with the investment
E. None of the above
B. Reject the investment
Which investment technique yields the same result as Net Present Value (NPV)?
A. Payback rule
B. Discounted Payback Period
C. Internal Rate of Return
D. Average Accounting Return
E. Profitability Index
C. Internal Rate of Return
Which statement is true regarding the Internal Rate of Return (IRR)?
A. It is the most important alternative to Net Present Value
B. The IRR is a single rate of return which summarizes the merits of the project
C. It is the discount rate which makes the Net Present Value of an investment equate to
zero
D. An investment is acceptable if its IRR exceeds the required return
E. All of the above
E. All of the above
What is the best definition of an opportunity cost?
A. Sunk cost
B. Erosion
C. The most valuable investment alternative given up if a particular investment is
undertaken
