FIN /
320F
/ /
Final Exam Questions With Correct Answers
/ // // // // //
capital //assets //- //verified //answer(s)-✔✔major //investments //that //are //long-
lived, //expensive //and //difficult //to //unwind
another //word //for //non-financial //assets //- //verified //answer(s)-✔✔real //assets
3 //major //capital //budgeting //decisions //- //verified //answer(s)-✔✔1. //NPV //2. //IRR //3. //PI
capital //expenditure //- //verified //answer(s)-
✔✔____ //is //a //major //investment //that //will //last //for //several //years
the //capital //budgeting //process //- //verified //answer(s)-✔✔___ //is //a //formal //decision-
making //process //used //to //guide //capital //expenditure //decisions //many //companies //make
6 //stages //of //the //capital //budgeting //process //- //verified //answer(s)-✔✔1. //Develop //long-
term /
/goals /
/2. /
/Screen /
/investments //3. //Evaluate //investments //4. //implement //the //project //5. //control //6. //audit
net //present //value //- //verified //answer(s)-
✔✔___ //measures //the //wealth //increase //of //a //project
,internal //rate //of //return //- //verified //answer(s)-
✔✔__ /
/gives /
/the /
/rate /
/of /
/return /
/earned /
/on //
a/
/project, /
/which /
/can /
/then /
/be /
/compared /
/to //the //opportunity //cost //to //determine //whether //the //project //should //be //adopted
profitability //index //- //verified //answer(s)-
✔✔The /
/__ /
/is //
a/
/ratio /
/of /
/the /
/present /
/value /
/of /
/the /
/inflows /
/and //outflows //used //in //NPV //analysis. //It //calculates //the //wealth //created //per //dollar //invested
profitability //index //- //verified //answer(s)-
✔✔___ //is //the //ratio //of //the //present //value //outflows //and //inflows
, economic //- //verified //answer(s)-
✔✔the /
/three /
/key //rules //that //are //generally //used //for //capital //budgeting //decisions //are //__ //decision //rules
greater; //1 //- //verified //answer(s)-✔✔if //PI //is //__ //than //__, //the //project //is //acceptable
NPV //- //verified //answer(s)-
✔✔__ /
/is //
a/
/dollar /
/measure /
/of /
/desirability /
/and /
/measures /
/the /
/wealth /
/created /
/by //the //project. //It //considers //the //magnitude, //timing, //and //risk //of //the //project's //cash //flows
IRR //- //verified //answer(s)-
✔✔__ /
/is //
a/
/relative, /
/percent /
/measure /
/that /
/estimates /
/what /
/the /
/project /
/will /
320F
/ /
Final Exam Questions With Correct Answers
/ // // // // //
capital //assets //- //verified //answer(s)-✔✔major //investments //that //are //long-
lived, //expensive //and //difficult //to //unwind
another //word //for //non-financial //assets //- //verified //answer(s)-✔✔real //assets
3 //major //capital //budgeting //decisions //- //verified //answer(s)-✔✔1. //NPV //2. //IRR //3. //PI
capital //expenditure //- //verified //answer(s)-
✔✔____ //is //a //major //investment //that //will //last //for //several //years
the //capital //budgeting //process //- //verified //answer(s)-✔✔___ //is //a //formal //decision-
making //process //used //to //guide //capital //expenditure //decisions //many //companies //make
6 //stages //of //the //capital //budgeting //process //- //verified //answer(s)-✔✔1. //Develop //long-
term /
/goals /
/2. /
/Screen /
/investments //3. //Evaluate //investments //4. //implement //the //project //5. //control //6. //audit
net //present //value //- //verified //answer(s)-
✔✔___ //measures //the //wealth //increase //of //a //project
,internal //rate //of //return //- //verified //answer(s)-
✔✔__ /
/gives /
/the /
/rate /
/of /
/return /
/earned /
/on //
a/
/project, /
/which /
/can /
/then /
/be /
/compared /
/to //the //opportunity //cost //to //determine //whether //the //project //should //be //adopted
profitability //index //- //verified //answer(s)-
✔✔The /
/__ /
/is //
a/
/ratio /
/of /
/the /
/present /
/value /
/of /
/the /
/inflows /
/and //outflows //used //in //NPV //analysis. //It //calculates //the //wealth //created //per //dollar //invested
profitability //index //- //verified //answer(s)-
✔✔___ //is //the //ratio //of //the //present //value //outflows //and //inflows
, economic //- //verified //answer(s)-
✔✔the /
/three /
/key //rules //that //are //generally //used //for //capital //budgeting //decisions //are //__ //decision //rules
greater; //1 //- //verified //answer(s)-✔✔if //PI //is //__ //than //__, //the //project //is //acceptable
NPV //- //verified //answer(s)-
✔✔__ /
/is //
a/
/dollar /
/measure /
/of /
/desirability /
/and /
/measures /
/the /
/wealth /
/created /
/by //the //project. //It //considers //the //magnitude, //timing, //and //risk //of //the //project's //cash //flows
IRR //- //verified //answer(s)-
✔✔__ /
/is //
a/
/relative, /
/percent /
/measure /
/that /
/estimates /
/what /
/the /
/project /
/will /
