1.

A firm wants to start a project. A team of financial analysts estimated the following cash flows

year cash flow

0 -$100,000

1 55,000

2 43,000

3 45,000

Suppose that the discount rate (interest rate) is 12%. According to the calculation of NPV we should

Group of answer choices

a. not undertake the project

b. we can not decide because we do not have enough information

c. undertake the project

d. undertake the project in the short run and do not under take it in the long run

2.

A firm wants to start a project. A team of financial analysts estimated the following cash flows

year cash flow

0 -$100,000

1 55,000

2 43,000

3 45,000

The pay back period is

Group of answer choices

a.1.04 years

b.We cannot find it

c. 2.04 years

d. 3.04 years

3.

A firm wants to start a project. A team of financial analysts estimated the following cash flows

year cash flow

0 -$100,000

1 55,000

2 43,000

3 45,000

Based on your calcification of the pay back period and if the cut off point is 2 years, the project should

Group of answer choices

a. Can not decide because we do not have enough information

b. not undertake the project in the short run but undertake the project in the long run

c. Undertake the project

d. Not undertake the project

4.

A firm wants to start a project. A team of financial analysts estimated the following cash flows

year cash flow

0 -$100,000

1 55,000

2 43,000

3 45,000

Suppose that the discount rate (interest rate) is 12%. The profitability index (PI) is

Group of answer choices

a. 2.15

b. 1.15

c. 0.87

d. 15,416.59

5.

____ the amount of time required for an investment to generate cash flows sufficient to recover its initial cost is called

Group of answer choices

a. NPV (Net Present Value)

b. Pay back rule

c. AAR (Average Accounting Return)

d. PI (Profitability Index)