FINA 3313 Final
Question 1.
Projects that compete with one another so that the acceptance of one eliminates from further consideration all other projects that
serve a similar function
ANSWER
Mutually Exclusive
Question 2.
The primary purpose of capital budgeting is to
ANSWER
Maximize the shareholders' wealth
Question 3.
The "gold standard" of investment criteria refers to
ANSWER
NPV
Question 4.
What is correct for a project with a negative NPV?
ANSWER
The cost of capital exceeds the IRR
Question 5.
The multiple IRR problem occurs when the signs of a project's cash flows change more than once
ANSWER
True
Question 6.
Capital rationing may be beneficial to a firm if it
ANSWER
Weeds out proposals with weaker or biased NPVs
Question 7.
Invest in assets that earn a return greater than the minimum acceptable hurdle rate
ANSWER
The investment decision
1/5
, Question 8.
Find the right kind of debt for your firm and the right mix of debt and equity to fund your operations
ANSWER
The financing decision
Question 9.
If you can't find investments that make your minimum acceptable rate, return the cash to owners of your business
ANSWER
The dividend decision
Question 10.
Proposal generation
ANSWER
Step 1
Question 11.
Review and analysis
ANSWER
Step 2
Question 12.
Decision making
ANSWER
Step 3
Question 13.
Implementation
ANSWER
Step 4
Question 14.
Follow-up
ANSWER
Step 5
Question 15.
It should not usually be clear whether we are describing independent or mutually exclusive pro-jects in the following chapters
because when we only describe one project then it can be assumed to be independent.
ANSWER
2/5
Question 1.
Projects that compete with one another so that the acceptance of one eliminates from further consideration all other projects that
serve a similar function
ANSWER
Mutually Exclusive
Question 2.
The primary purpose of capital budgeting is to
ANSWER
Maximize the shareholders' wealth
Question 3.
The "gold standard" of investment criteria refers to
ANSWER
NPV
Question 4.
What is correct for a project with a negative NPV?
ANSWER
The cost of capital exceeds the IRR
Question 5.
The multiple IRR problem occurs when the signs of a project's cash flows change more than once
ANSWER
True
Question 6.
Capital rationing may be beneficial to a firm if it
ANSWER
Weeds out proposals with weaker or biased NPVs
Question 7.
Invest in assets that earn a return greater than the minimum acceptable hurdle rate
ANSWER
The investment decision
1/5
, Question 8.
Find the right kind of debt for your firm and the right mix of debt and equity to fund your operations
ANSWER
The financing decision
Question 9.
If you can't find investments that make your minimum acceptable rate, return the cash to owners of your business
ANSWER
The dividend decision
Question 10.
Proposal generation
ANSWER
Step 1
Question 11.
Review and analysis
ANSWER
Step 2
Question 12.
Decision making
ANSWER
Step 3
Question 13.
Implementation
ANSWER
Step 4
Question 14.
Follow-up
ANSWER
Step 5
Question 15.
It should not usually be clear whether we are describing independent or mutually exclusive pro-jects in the following chapters
because when we only describe one project then it can be assumed to be independent.
ANSWER
2/5
