Test Bank For Corporate Finance 12th Edition By Ross All (Chapter 1-27) Updated Version 2025 Complete Newest Edition Instant Download PDF

CorporatemFinance,m12em(Ross)
Chapterm4m DiscountedmCashmFlowmValuation

1) Themnetmpresentmvaluemofmamprojectmismequalmtomthe:
A) presentmvaluemofmthemfuturemcashmflows.
B) presentmvaluemofmthemfuturemcashmflowsmminusmtheminitialmcost.
C) futuremvaluemofmthemfuturemcashmflowsmminusmtheminitialmcost.
D) futuremvaluemofmthemfuturemcashmflowsmminusmthempresentmvaluemofmtheminitialmcost.
E) summofmthemproject'smanticipatedmcashminflows.

Answer:mBmDiffic
ulty:m1mEasy
Section:m4.1mValuation:mThemOne-
PeriodmCasemTopic:m Netmpresentmvalue
Bloom's:m UnderstandmAACS
B:m ReflectivemThinking
Accessibility:m KeyboardmNavigation

2) Whichmonemofmthesemstatementsmismcorrectmconcerningmthemtimemvaluemofmmoney?
A) Increasingmtheminitialmcostmofmamprojectmincreasesmthemproject'smNPV.
B) Increasingmthemdiscountmrate,mincreasesmthemPVmofmamproject.
C) IncreasingmthemFVmdecreasesmthemPV.
D) DecreasingmthemPVmdecreasesmthemFV.
E) DecreasingmthemdiscountmratemincreasesmthemFV.

Answer:mDmDiffic
ulty:m1mEasy
Section:m4.1mValuation:mThemOne-
PeriodmCasemTopic:m Netmpresentmvalue
Bloom's:m UnderstandmAACS
B:m ReflectivemThinking
Accessibility:m KeyboardmNavigation

,3) Atmamdiscountmratemofm5mpercent,mwhichmonemofmthemfollowingmismthemcorrectmformulam
formcomputingmthemPVmofm$1mtombemreceivedmonemyearmfrommtoday?
A)m$1/1.05
B)m$1
C)m$1m×m1.05
D)m$1m×m1.052
E)m$1/1.052

Answer:mAmDiffic
ulty:m1mEasy
Section:m4.1mValuation:mThemOne-
PeriodmCasemTopic:mPresentmvaluem-
msinglemcashmflowmBloom's:m Understand

AACSB:mReflectivemThinkingmAcce
ssibility:m KeyboardmNavigation

4) Whatmeffectmwillmanmincreaseminmthemdiscountmratemhavemonmthempresentmvaluemofmamprojectmthatm
hasmanminitialmcashmoutflowmfollowedmbymfivemyearsmofmcashminflows?
A) TheremwillmbemnomeffectmonmthemPV.
B) ThemPVmwillmchangembutmthemdirectionmofmthemchangemismunknown.
C) ThemPVmwillmremainmthemsamemasmthemtimingmofmthemcashmflowsmmustmchangemalso.
D) ThemPVmwillmincrease.
E) ThemPVmwillmdecrease.

Answer:mEmDiffic
ulty:m1mEasy
Section:m 4.2mThemMultiperiodmCase
Topic:m Presentmvaluem-
mmultiplemcashmflowsmBloom's:m Understand
AACSB:mReflectivemThinkingmAcce
ssibility:m KeyboardmNavigation

,5) Youmaremconsideringmtwomprojects.mProjectmAmhasmprojectedmcashmflowsmofm$6,500,m$4,500,mand
$2,500mformthemnextmthreemyears,mrespectively.mProjectmBmhasmprojectedmcashmflowsmofm$2,500,
$4,500,mandm$6,500mformthemnextmthreemyears,mrespectively.mAssumingmbothmprojectsmhavemthemsa
meminitialmcost,myoumknowmthat:
A) theremaremnomconditionsmundermwhichmthemprojectsmcanmhavemequalmvalues.
B) ProjectmBmhasmamhighermnetmpresentmvaluemthanmProjectmA.
C) ProjectmAmismmoremvaluablemthanmProjectmBmgivenmampositivemdiscountmrate.
D) bothmprojectsmoffermthemsamemratemofmreturn.
E) bothmprojectsmhavemequalmnetmpresentmvaluesmatmanymdiscountmrate.

Answer:mCmDiffic
ulty:m1mEasy
Section:m 4.2mThemMultiperiodmCase
Topic:m Presentmvaluem-
mmultiplemcashmflowsmBloom's:m Understand
AACSB:mReflectivemThinkingmAcce
ssibility:m KeyboardmNavigation

6) Anminterestmratemthatmismcompoundedmmonthly,mbutmismexpressedmasmifmthemratemweremcompoun
dedmannually,mismcalledmthe rate.
A) statedminterest
B) compoundminterest
C) effectivemannual
D) periodicminterest
E) dailyminterest

Answer:mCmDiffic
ulty:m1mEasy
Section:m 4.3mCompoundingmPeriods
Topic:m Annual,mholdingmperiod,mandmeffectivemrate
smBloom's:m Remember
AACSB:mReflectivemThinkingmAcce
ssibility:m KeyboardmNavigation

, 7) Theminterestmratemchargedmpermperiodmmultipliedmbymthemnumbermofmperiodsmpermyearmismcalledmth
e
m rate.
A) effectivemannual
B) annualmpercentage
C) periodicminterest
D) compoundminterest
E) dailyminterest

Answer:mBmDiffic
ulty:m1mEasy
Section:m 4.3mCompoundingmPeriods
Topic:m Annual,mholdingmperiod,mandmeffectivemrate
smBloom's:m Remember
AACSB:mReflectivemThinkingmAcce
ssibility:m KeyboardmNavigation

8) Themannualmpercentagemrate:
A) considersminterestmonminterest.
B) ismthemactualmcostmofmamloanmwithmmonthlympayments.
C) ismhighermthanmthemeffectivemannualmratemwhenminterestmismcompoundedmquarterly.
D) ismtheminterestmratemchargedmpermperiodmdividedmbym(1m+mn),mwhenmnmismthemnumbermofmperiods
mpermyear.
E) equalsmthemeffectivemannualmratemwhenmtheminterestmonmanmaccountmismdesignatedmasmsim
pleminterest.

Answer:mEmDiffic
ulty:m1mEasy
Section:m 4.3mCompoundingmPeriods
Topic:m Annual,mholdingmperiod,mandmeffectivemrate
smBloom's:m Understand
AACSB:mReflectivemThinkingmAcce
ssibility:m KeyboardmNavigation