fin 325 final exam review questions with correct
answers
the four basic areas of finance are investments, financial institutions,
international finance, and Correct Answer-corporate finance
the primary goal of the financial manager is to Correct Answer-
maximize the value of equity
the future value of a cash flow is divided by the ___ to find its present
value Correct Answer-discount factor
If you have 20,000 to invest and you goal is to have 23000 next year,
what rate of return do you need to earn? Correct Answer-15%
(23000=20000[1+r]^1)
which of the following is NOT a primary concern of the financial
manager?
A. Working Capital Management
B. Brand Awareness
C. Capital Budgeting
D. Capital Structure Correct Answer-Brand Awareness
The net present value of a project should include cash flows from
Correct Answer-forecasted operations and opportunity costs
, net working capital should be considered in project cash flows because
Correct Answer-firms must invest cash in short term assets to produce
finished goods
the following are some of the negative qualities of the IRR investment
criteria except:
A. IRR is conceptually easy to communicate
B. Projects with non-conventional CFs can have multiple IRRs
C. IRR method cannot distinguish between a borrowing project and a
lending project
D. IRR often prefers projects with smaller investments Correct Answer-
IRR is conceptually easy to communicate
The market value of a resource that may be relevant to an an investment
decision even when no cash changes hand is called a Correct Answer-
opportunity cost
Lotus CO. paid 500k last year to build an access road to a land site they
own and are thinking of constructing a new facility upon. When
calculating the NPV of building the new facility: Correct Answer-the
$500k should not be included because it is a sunk cost
If an investment project has an IRR equal to the required rate of return,
the NPV for that project is Correct Answer-zero
The EAR of a loan with monthly compound will Correct Answer-always
be higher than the APR
answers
the four basic areas of finance are investments, financial institutions,
international finance, and Correct Answer-corporate finance
the primary goal of the financial manager is to Correct Answer-
maximize the value of equity
the future value of a cash flow is divided by the ___ to find its present
value Correct Answer-discount factor
If you have 20,000 to invest and you goal is to have 23000 next year,
what rate of return do you need to earn? Correct Answer-15%
(23000=20000[1+r]^1)
which of the following is NOT a primary concern of the financial
manager?
A. Working Capital Management
B. Brand Awareness
C. Capital Budgeting
D. Capital Structure Correct Answer-Brand Awareness
The net present value of a project should include cash flows from
Correct Answer-forecasted operations and opportunity costs
, net working capital should be considered in project cash flows because
Correct Answer-firms must invest cash in short term assets to produce
finished goods
the following are some of the negative qualities of the IRR investment
criteria except:
A. IRR is conceptually easy to communicate
B. Projects with non-conventional CFs can have multiple IRRs
C. IRR method cannot distinguish between a borrowing project and a
lending project
D. IRR often prefers projects with smaller investments Correct Answer-
IRR is conceptually easy to communicate
The market value of a resource that may be relevant to an an investment
decision even when no cash changes hand is called a Correct Answer-
opportunity cost
Lotus CO. paid 500k last year to build an access road to a land site they
own and are thinking of constructing a new facility upon. When
calculating the NPV of building the new facility: Correct Answer-the
$500k should not be included because it is a sunk cost
If an investment project has an IRR equal to the required rate of return,
the NPV for that project is Correct Answer-zero
The EAR of a loan with monthly compound will Correct Answer-always
be higher than the APR
