Test Bank For Essentials of Corporate Finance, 18th Edition All Chapters - 9781264101573.pdf

CorporateNFinance,N12eN(Ross)
ChapterN4N N DiscountedNCashNFlowNValuation

1) TheNnetNpresentNvalueNofNaNprojectNisNequalNtoNthe:
A) presentNvalueNofNtheNfutureNcashNflows.
B) presentNvalueNofNtheNfutureNcashNflowsNminusNtheNinitialNcost.
C) futureNvalueNofNtheNfutureNcashNflowsNminusNtheNinitialNcost.
D) futureNvalueNofNtheNfutureNcashNflowsNminusNtheNpresentNvalueNofNtheNinitialNcost.
E) sumNofNtheNproject'sNanticipatedNcashNinflows.

Answer:N BNDifficult
y:N1NEasy
Section:N 4.1NValuation:NTheNOne-
PeriodNCaseNTopic:N NetNpresentNvalue
Bloom's:N UnderstandNAACS
B:N ReflectiveNThinking
Accessibility:N KeyboardNNavigation

2) WhichNoneNofNtheseNstatementsNisNcorrectNconcerningNtheNtimeNvalueNofNmoney?
A) IncreasingNtheNinitialNcostNofNaNprojectNincreasesNtheNproject'sNNPV.
B) IncreasingNtheNdiscountNrate,NincreasesNtheNPVNofNaNproject.
C) IncreasingNtheNFVNdecreasesNtheNPV.
D) DecreasingNtheNPVNdecreasesNtheNFV.
E) DecreasingNtheNdiscountNrateNincreasesNtheNFV.

Answer:N DNDifficult
y:N1NEasy
Section:N 4.1NValuation:NTheNOne-
PeriodNCaseNTopic:N NetNpresentNvalue
Bloom's:N UnderstandNAACS
B:N ReflectiveNThinking
Accessibility:N KeyboardNNavigation

,3) AtNaNdiscountNrateNofN5Npercent,NwhichNoneNofNtheNfollowingNisNtheNcorrectNformulaNf
orNcomputingNtheNPVNofN$1NtoNbeNreceivedNoneNyearNfromNtoday?
A) $1/1.05
B) $1
C) $1N×N1.05
D) $1N×N1.052
E) $1/1.052

Answer:N ANDifficult
y:N1NEasy
Section:N 4.1NValuation:NTheNOne-
PeriodNCaseNTopic:N PresentNvalueN-
NsingleNcashNflowNBloom's:N Understand

AACSB:N ReflectiveNThinkingNAcces
sibility:N KeyboardNNavigation

4) WhatNeffectNwillNanNincreaseNinNtheNdiscountNrateNhaveNonNtheNpresentNvalueNofNaNprojectNthatNh
asNanNinitialNcashNoutflowNfollowedNbyNfiveNyearsNofNcashNinflows?
A) ThereNwillNbeNnoNeffectNonNtheNPV.
B) TheNPVNwillNchangeNbutNtheNdirectionNofNtheNchangeNisNunknown.
C) TheNPVNwillNremainNtheNsameNasNtheNtimingNofNtheNcashNflowsNmustNchangeNalso.
D) TheNPVNwillNincrease.
E) TheNPVNwillNdecrease.

Answer:N ENDifficult
y:N1NEasy
Section:N 4.2NTheNMultiperiodNCase
Topic:N PresentNvalueN-
NmultipleNcashNflowsNBloom's:N Understand

AACSB:N ReflectiveNThinkingNAcces
sibility:N KeyboardNNavigation

,5) YouNareNconsideringNtwoNprojects.NProjectNANhasNprojectedNcashNflowsNofN$6,500,N$4,500,Nand
$2,500NforNtheNnextNthreeNyears,Nrespectively.NProjectNBNhasNprojectedNcashNflowsNofN$2,500,
$4,500,NandN$6,500NforNtheNnextNthreeNyears,Nrespectively.NAssumingNbothNprojectsNhaveNtheNsame
NinitialNcost,NyouNknowNthat:

A) thereNareNnoNconditionsNunderNwhichNtheNprojectsNcanNhaveNequalNvalues.
B) ProjectNBNhasNaNhigherNnetNpresentNvalueNthanNProjectNA.
C) ProjectNANisNmoreNvaluableNthanNProjectNBNgivenNaNpositiveNdiscountNrate.
D) bothNprojectsNofferNtheNsameNrateNofNreturn.
E) bothNprojectsNhaveNequalNnetNpresentNvaluesNatNanyNdiscountNrate.

Answer:N CNDifficult
y:N1NEasy
Section:N 4.2NTheNMultiperiodNCase
Topic:N PresentNvalueN-
NmultipleNcashNflowsNBloom's:N Understand

AACSB:N ReflectiveNThinkingNAcces
sibility:N KeyboardNNavigation

6) AnNinterestNrateNthatNisNcompoundedNmonthly,NbutNisNexpressedNasNifNtheNrateNwereNcompound
edNannually,NisNcalledNtheN rate.
A) statedNinterest
B) compoundNinterest
C) effectiveNannual
D) periodicNinterest
E) dailyNinterest

Answer:N CNDifficult
y:N1NEasy
Section:N 4.3NCompoundingNPeriods
Topic:N Annual,NholdingNperiod,NandNeffectiveNratesNBl
oom's:N Remember
AACSB:N ReflectiveNThinkingNAcces
sibility:N KeyboardNNavigation

, 7) TheNinterestNrateNchargedNperNperiodNmultipliedNbyNtheNnumberNofNperiodsNperNyearNisNcalledNth
e
rate.
A) effectiveNannual
B) annualNpercentage
C) periodicNinterest
D) compoundNinterest
E) dailyNinterest

Answer:N BNDifficult
y:N1NEasy
Section:N 4.3NCompoundingNPeriods
Topic:N Annual,NholdingNperiod,NandNeffectiveNratesNBl
oom's:N Remember
AACSB:N ReflectiveNThinkingNAcces
sibility:N KeyboardNNavigation

8) TheNannualNpercentageNrate:
A) considersNinterestNonNinterest.
B) isNtheNactualNcostNofNaNloanNwithNmonthlyNpayments.
C) isNhigherNthanNtheNeffectiveNannualNrateNwhenNinterestNisNcompoundedNquarterly.
D) isNtheNinterestNrateNchargedNperNperiodNdividedNbyN(1N+Nn),NwhenNnNisNtheNnumberNofNperiodsNp
erNyear.
E) equalsNtheNeffectiveNannualNrateNwhenNtheNinterestNonNanNaccountNisNdesignatedNasNsimp
leNinterest.

Answer:N ENDifficult
y:N1NEasy
Section:N 4.3NCompoundingNPeriods
Topic:N Annual,NholdingNperiod,NandNeffectiveNratesNBl
oom's:N Understand
AACSB:N ReflectiveNThinkingNAcces
sibility:N KeyboardNNavigation