BUSI 408 Study Questions & Answers
-may be useful when available investment funds are limited
advantages of PI -easy to understand and communicate
-correct decision when evaluating independent projects
always select the ______ NPV highest
an annuity for which the cash flows occur at the beginning of the
annuity due
period
independent vs. mutually exclusive, scale problem, timing
disadvantages to IRR
problem.
disadvantages to the Profitability May lead to incorrect decisions in comparisons of mutually
Index exclusive investments
growth if you invested in a company annually as opposed to semi-
Effective annual interest (EAR)
annually, etc.
ending balance on amortization beginning balance - principle
a stream of cash flows, growing at a constant rate and paid at
growing annuity
regular intervals, that end after a specified number of periods
Growth perpetuity growing at a constant rate forever
how would you determine the life determining Inv TO and then Days sales inventory / periods
of a company if it shut down? looking at.
only accept project if NPV is greater than 0
only select the project if IRR is greater than required return
ordinary annuity If the first payment occurs at the end of the period
perpetuity eternal payments
what are the two pieces to an principal and interest
installment payment
-may be useful when available investment funds are limited
advantages of PI -easy to understand and communicate
-correct decision when evaluating independent projects
always select the ______ NPV highest
an annuity for which the cash flows occur at the beginning of the
annuity due
period
independent vs. mutually exclusive, scale problem, timing
disadvantages to IRR
problem.
disadvantages to the Profitability May lead to incorrect decisions in comparisons of mutually
Index exclusive investments
growth if you invested in a company annually as opposed to semi-
Effective annual interest (EAR)
annually, etc.
ending balance on amortization beginning balance - principle
a stream of cash flows, growing at a constant rate and paid at
growing annuity
regular intervals, that end after a specified number of periods
Growth perpetuity growing at a constant rate forever
how would you determine the life determining Inv TO and then Days sales inventory / periods
of a company if it shut down? looking at.
only accept project if NPV is greater than 0
only select the project if IRR is greater than required return
ordinary annuity If the first payment occurs at the end of the period
perpetuity eternal payments
what are the two pieces to an principal and interest
installment payment
