ESET 444 Quiz 6 Exam With Complete Solutions
A facility manager wants to obtain approval for purchase of a new air compressor. The
cost is € 80,000. The savings over a three year period are € 120,000. What is the simple
ROI for this three year period? - ANSWER 50%
Which method of financial evaluation takes into account all the costs of ownership such
as energy and maintenance as well as initial purchase price? - ANSWER Life cycle costing
In the third year of a project, the costs are € 5,000 and the savings are € 23,000. What is
the present value of this cash flow assuming an interest rate of 9.5% - ANSWER € 13,709
An energy efficiency project is projected to have the following discounted cash flows:
Year 1: $15,000. Year 2: $12,000. Year 3: $10,000. The initial cost is $40,000. Based on the
net present value of the project, would you approve this investment? - ANSWER No
The internal rate of return is the interest rate that is equivalent to the returns from the
project. It is equivalent to the interest rate that results in an NPV of zero. - ANSWER True
An energy efficiency project is projected to have the following discounted cash flows:
Year 1: $15,000. Year 2: $12,000. Year 3: $10,000. The initial cost is 320,000. Company
rules state that projects with a discounted payback of less than 2.5 years qualify for
capital investment. Does this project qualify? - ANSWER No
A facility manager wants to obtain approval for purchase of a new air compressor. The
cost is € 80,000. The savings over a three year period are € 120,000. What is the simple
ROI for this three year period? - ANSWER 50%
Which method of financial evaluation takes into account all the costs of ownership such
as energy and maintenance as well as initial purchase price? - ANSWER Life cycle costing
In the third year of a project, the costs are € 5,000 and the savings are € 23,000. What is
the present value of this cash flow assuming an interest rate of 9.5% - ANSWER € 13,709
An energy efficiency project is projected to have the following discounted cash flows:
Year 1: $15,000. Year 2: $12,000. Year 3: $10,000. The initial cost is $40,000. Based on the
net present value of the project, would you approve this investment? - ANSWER No
The internal rate of return is the interest rate that is equivalent to the returns from the
project. It is equivalent to the interest rate that results in an NPV of zero. - ANSWER True
An energy efficiency project is projected to have the following discounted cash flows:
Year 1: $15,000. Year 2: $12,000. Year 3: $10,000. The initial cost is 320,000. Company
rules state that projects with a discounted payback of less than 2.5 years qualify for
capital investment. Does this project qualify? - ANSWER No
