FIN 515 Final Exam (Version 3) Page 1

(TCO A) Which of the following does NOT always increase a company’s market value?(a) Increasing the expected growth rate of sales (b) Increasing the expected operating profitability (NOPAT/Sales) (c) Decreasing the capital requirements (Capital/Sales) (d) Decreasing the weighted average cost of capital (e) Increasing the expected rate of return on invested capital (TCO F) Which of the following statements is correct? (a) The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same accept/reject decisions for independent projects. (b) For mutually exclusive projects with normal cash flows, ……….(e) The percentage difference between the MIRR and the IRR is equal to the project’s WACC (TCO F) Which of the following statements is correct? (a) The MIRR and NPV decision criteria can never conflict. (b) The IRR method can never be subject to the multiple IRR problem, while the MIRR method can be………….(e) The MIRR method assumes that cash flows are reinvested at the crossover rate.