FINC 331 Final | UPDATED Questions with 100% Verified Answers
Question:
Relevant cash flows for a project are best described as
________. A.incremental cash flows B.incidental cash flows
C.contingent cash flows D.sunk cash flows
Answer:
A.
Question:
________ projects have the same function; the acceptance of
one ________ the others from consideration.
A. Capital; eliminates B.Mutually exclusive; eliminates
C.Replacement; eliminates D.Independent; does not eliminate
Answer:
B.
Question:
When determining the after-tax cost of a bond, the face value
of the issue must be adjusted to the net proceeds amounts by
considering ________.
A. the flotation costs
B. the taxes
C. the approximate returns
D. the risks
Answer:
A.
Question:
What is IRR of the following stream of cash flows? Year CF
0 -$40,000 1 10,000 2 8,000 3 6,500 4 4,500 5 10,000
A. 10%
B. 8%
C. -5.50%
,D. -0.86%
Answer:
D.
Question:
A corporation is considering expanding operations to meet
growing demand. With the capital expansion, the current
accounts are expected to change. Management expects cash to
increase by $20,000, accounts receivable by $40,000, and
inventories by $60,000. At the same time accounts payable
will increase by $50,000, accruals by $10,000, and
longminus·term debt by $100,000. The change in net working
capital is ________.
A. an increase of $120,000
B. a decrease of $120,000
C. an increase of $60,000
D. a decrease of $60,000
Answer:
D.
Question:
In order to recognize the interrelationship between financing
and investments, a firm should use ________ when evaluating
an investment.
A. the weighted average cost of all financing sources
B. the current opportunity cost
C. the most costly source of financing
D. the least costly source of financing
Answer:
A.
Question:
, The ________ approach is used to convert the net present
value of unequal·lived projects into an equivalent annual
amount (in net present value terms).
A. internal rate of return
B. annualized net present value
C. investment opportunities schedule
D. risk-adjusted discount rate
Answer:
B.
Question:
A conventional cash flow pattern associated with capital
investment projects consists of an initial ________.
A. outflow followed by a series of outflows
B. outflow followed by a series of inflows
C. inflow followed by a broken series of outlay
D. outflow followed by a broken cash series
Answer:
B.
Question:
A firm is evaluating two independent projects utilizing the
internal rate of return technique. Project X has an initial
investment of $80,000 and cash inflows at the end of each of
the next five years of $25,000. Project Z has an initial
investment of $120,000 and cash inflows at the end of each of
the next four years of $40,000. The firm could ________.
A. accept Project X because its IRR is higher than Project Z
B. reject both the projects because they have negative IRR
C. accept Project Z because its IRR is higher than Project X
D. accept both projects because they have equal IRR
Answer:
D.
Question:
Relevant cash flows for a project are best described as
________. A.incremental cash flows B.incidental cash flows
C.contingent cash flows D.sunk cash flows
Answer:
A.
Question:
________ projects have the same function; the acceptance of
one ________ the others from consideration.
A. Capital; eliminates B.Mutually exclusive; eliminates
C.Replacement; eliminates D.Independent; does not eliminate
Answer:
B.
Question:
When determining the after-tax cost of a bond, the face value
of the issue must be adjusted to the net proceeds amounts by
considering ________.
A. the flotation costs
B. the taxes
C. the approximate returns
D. the risks
Answer:
A.
Question:
What is IRR of the following stream of cash flows? Year CF
0 -$40,000 1 10,000 2 8,000 3 6,500 4 4,500 5 10,000
A. 10%
B. 8%
C. -5.50%
,D. -0.86%
Answer:
D.
Question:
A corporation is considering expanding operations to meet
growing demand. With the capital expansion, the current
accounts are expected to change. Management expects cash to
increase by $20,000, accounts receivable by $40,000, and
inventories by $60,000. At the same time accounts payable
will increase by $50,000, accruals by $10,000, and
longminus·term debt by $100,000. The change in net working
capital is ________.
A. an increase of $120,000
B. a decrease of $120,000
C. an increase of $60,000
D. a decrease of $60,000
Answer:
D.
Question:
In order to recognize the interrelationship between financing
and investments, a firm should use ________ when evaluating
an investment.
A. the weighted average cost of all financing sources
B. the current opportunity cost
C. the most costly source of financing
D. the least costly source of financing
Answer:
A.
Question:
, The ________ approach is used to convert the net present
value of unequal·lived projects into an equivalent annual
amount (in net present value terms).
A. internal rate of return
B. annualized net present value
C. investment opportunities schedule
D. risk-adjusted discount rate
Answer:
B.
Question:
A conventional cash flow pattern associated with capital
investment projects consists of an initial ________.
A. outflow followed by a series of outflows
B. outflow followed by a series of inflows
C. inflow followed by a broken series of outlay
D. outflow followed by a broken cash series
Answer:
B.
Question:
A firm is evaluating two independent projects utilizing the
internal rate of return technique. Project X has an initial
investment of $80,000 and cash inflows at the end of each of
the next five years of $25,000. Project Z has an initial
investment of $120,000 and cash inflows at the end of each of
the next four years of $40,000. The firm could ________.
A. accept Project X because its IRR is higher than Project Z
B. reject both the projects because they have negative IRR
C. accept Project Z because its IRR is higher than Project X
D. accept both projects because they have equal IRR
Answer:
D.
