BFIN 300 FINAL Exam Questions And Answers |Latest 2025 | Guaranteed Pass.

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BFIN 300 FINAL Exam Questions And
Answers |Latest 2025 | Guaranteed Pass.


1) You purchase a run-down home in Albany for $25,000 and spend another $25,000 to repair
it. Your total in-cost is $50,000. When the work is done, you place the home back on the market
and find that it's worth $60,000. What is your NPV?
a) Zero
b) $10,000
c) $25,000
d) $50,000

e) $60,000 - Answer✔b) $10,000
NPV=60,000−50,000=10,000
2) What is the difference between an investment's market value and cost?
a) Internal Rate of Return (IRR)
b) Net Present Value (NPV)
c) Capital budgeting process
d) Discounted Cash Flow (DCF)

e) All of the above - Answer✔b) Net Present Value (NPV)


NPV is a measure used in capital budgeting to analyze the profitability of an investment. It
represents the difference between the present value of cash inflows and the present value of
cash outflows over time.
3) As a financial manager, what will you do with an investment if its Net Present Value (NPV) is
negative?
a) Estimate the cash flows of the business
b) Reject the investment

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c) Accept the investment
d) Be agnostic with the investment

e) None of the above - Answer✔b) Reject the investment


A negative NPV implies that the investment is not expected to be profitable or generate
sufficient returns to meet the required hurdle rate or cost of capital. Therefore, rejecting the
investment is a prudent financial decision in order to avoid potential financial losses.
4) Which investment technique yields the same result as Net Present Value (NPV)?
a) Payback Rule
b) Discounted Payback Period
c) Internal Rate of Return
d) Average Accounting Return

e) Profitability Index - Answer✔c) Internal Rate of Return (IRR)
The investment technique that yields the same result as Net Present Value (NPV) is the Internal
Rate of Return (IRR). The Internal Rate of Return is the discount rate that makes the NPV of an
investment equal to zero. In other words, it is the rate of return at which the present value of
the expected cash inflows equals the present value of the expected cash outflows.
5) Which statement is true regarding the Internal Rate of Return (IRR)? •
a) It is the most important alternative to Net Present Value
b) The IRR is a single rate of return which summarizes the merits of the project
c) It is the discount rate which makes the Net Present Value of an investment equate to zero
d) An investment is acceptable if its IRR exceeds the required return

e) All of the above - Answer✔d) An investment is acceptable if its IRR exceeds the required
return
The Internal Rate of Return (IRR) is the discount rate that makes the Net Present Value (NPV) of
an investment equal to zero. If the IRR is greater than the required rate of return (hurdle rate or
cost of capital), it indicates that the project is expected to be profitable, and accepting the
investment would be appropriate. If the IRR is less than the required rate of return, it suggests
that the project may not generate sufficient returns to meet the cost of capital, and the
investment may be rejected.
1) What is the best definition of an opportunity cost?
a) Sunk cost


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