$1$: Diagram $1$ below can be seen as a first principles way of looking at the value of a net cash flow producing

asset. $($This question is worth $1$ point.$)$

Answer $1$: True or False: $\_\_\_\_\_$

Question $2$: Diagram $1$ above can be seen as a first principles way of looking at the value of a bond as an asset. $($This

question is worth $1$ point.$)$

Answer $2$: True or False: $\_\_\_\_\_$

Question $3$: Diagram $2$ below can be seen as the bond price version of Diagram $1$ above. $($This question is worth $1$

point.$)$

Answer $3$: True or False: $\_\_\_\_\_$

Question $4$: Diagram $3$ below can be seen as the project value version of Diagram $1$ above. $($This question is worth $1$

point.$)$

Answer $4$: True or False: $\_\_\_\_\_$

Question $5$: A company would need to know the net present value of a project to determine if the project should be

undertaken, and if the project should be undertaken then the company should know the internal rate of return

generated by the project to determine the how much the project return goes to the company which can be described

as the difference between the the required rate of return and the internal rate of return. $($This question is worth $1$

point.$)$

Answer $5$: True or False: $\_\_\_\_\_$

Question $6$: In considering two mutually exclusive projects, if each project$$s value exceeds zero, the company should

accept the project with the higher NPV and reject the project with the lower NPV$..($This question is worth $1$

point.$)$

Answer $6$: True or False: $\_\_\_\_\_$

$=$

$==$

$(1+)$

$$

$=1$

Diagram $1$

$=$

$(1+)+$

$$

$(1+)$

$$

$=1$

Diagram $2$

$=$

$(1+)$