Sophia Finance Milestone 4(a)|Principle of Finance Milestone 4 Sophia Course (100% correct)

1 What is one disadvantage of NPV as a capital budget method? It can be misleading if inputs like cash flow turn out to be wrong. It is rarely used, so there is disagreement as to what an adequate NPV is. It cannot be used to compare investments with different upfront costs. It does not deliver an overall picture of the gain or loss of implementing a project. CONCEPT Net Present Value 2 Select a reason why a company would want to go public. To increase direct oversight from investors SOPHIA PRINCIPLES OF FINANCE MILESTONE 4 To decrease administrative costs To consolidate control of the company in the hands of management To have access to cheaper capital than a private company would CONCEPT Comparing Public and Private Financing 3 A company with a 120-day operating cycle determines its cash conversion cycle using the following data: Receivable days: 35 Inventory days: 95 Payable days: 45 What is the company's cash conversion cycle? 105 75 25 165