Principles of Finance: Exam 3
questions well answered graded A+
Break-Even Point (Formula) - correct answer ✔✔Fixed Cost / (Price - Variable Cost)
What capital budgeting technique should you use for independent projects? - correct answer
✔✔All budgeting techniques will give the SAME ANSWER.
What capital budgeting technique should you use for mutually exclusive projects? - correct
answer ✔✔NPV will give the best answer, always choose NPV!
Traditional Payback Period (Formula) - correct answer ✔✔Initial Investment / Operating Cash
Flow
What factor doesn't affect IRR? - correct answer ✔✔Market Fluctuations
What factors change IRR? - correct answer ✔✔Cash flows; life span
What expense isn't required to calculate Initial Investment Outlay? - correct answer
✔✔Depreciation Expenses
What is Risk? - correct answer ✔✔The chance that something other than expected occurs (i.e.
variability of returns)
Stand-Alone Risk - correct answer ✔✔Examining the risk of a single investment
questions well answered graded A+
Break-Even Point (Formula) - correct answer ✔✔Fixed Cost / (Price - Variable Cost)
What capital budgeting technique should you use for independent projects? - correct answer
✔✔All budgeting techniques will give the SAME ANSWER.
What capital budgeting technique should you use for mutually exclusive projects? - correct
answer ✔✔NPV will give the best answer, always choose NPV!
Traditional Payback Period (Formula) - correct answer ✔✔Initial Investment / Operating Cash
Flow
What factor doesn't affect IRR? - correct answer ✔✔Market Fluctuations
What factors change IRR? - correct answer ✔✔Cash flows; life span
What expense isn't required to calculate Initial Investment Outlay? - correct answer
✔✔Depreciation Expenses
What is Risk? - correct answer ✔✔The chance that something other than expected occurs (i.e.
variability of returns)
Stand-Alone Risk - correct answer ✔✔Examining the risk of a single investment
