D076- FINANCE- MASTER LIST

A potential project to expand the size of an apartment complex will cost $100,000. Its calculated net present value is $5,000. Given this information, which statement is correct? - The project should be accepted because it has a positive NPV. The YTM of a bond went from 8% to 7%. What can be predicted about the price of the bond? - It will increase. 0 / 1 The company Betsy's Wigs is considering three potential projects that are not mutually exclusive. The IRR, NPV, and PI for each project are listed in the table below. Use this information to rank the projects in the order in which Betsy's Wigs should accept them to bring the most value to the firm. - Project 3, Project 2, Project 1 Correct! The projects with the highest PIs should be accepted first. A company is trying to decide which of four projects to invest in. Project 1 has an IRR of 14% and an NPV of $54,000. Project 2 has an IRR of 11% and an NPV of $67,000. Project 3 has an IRR of 9% and an NPV of $60,000. Project 4 has an IRR of 13% and an NPV of $47,000. If the company can do only one project, which project should it choose to add the greatest value to the firm? - Project 2 Correct! The project with the highest NPV will bring the most value to the company Why is it important to have an accurate, carefully calculated required rate of return as part of the NPV? - An inaccurate required rate estimate could cause a firm to reject good projects or accept bad projects.