1. Which of the following are an advantage of the IRR method of capital budgeting?

1. It is easy to calculate by hand
2. It accounts for all the cash flow of a projects
3. It is objective
4. It is unbiased
5. It is unambiguous

2. Which of the following about the Weight Average Cost of Capital (WACC) is true?

1. Market value weighting is the method that management should use when calculating their WACC
2. The WACC should be used in Capital Budgeting analysis for all projects that the firm undertakes
3. The WACC is the return that investors in the firm will achieve on average on their investment in a company
4. The WACC does not depend on the tax rate (false)
5. The WACC should not be used to evaluate projects that have lower than usual levels of risk

3. Which of the following statements is not an example of political risk for a company with international operations?

1. Change in foreign tax policy
2. Translation risk
3. Currency restrictions
4. Expropriation or confiscation of assets
5. Change in foreign environmental regulations

4. If you hear on the news that the Canadian Dollar strengthened against the US dollar, then that means that:

1. Canadian Export to the United States will be more competitively priced
2. It will take more US Dollars to buy Canadians Dollars
3. Trips to the United states by Canadians will be more expensive
4. Canadians sourced oil will become cheaper for American to buy
5. Goods imported from the United States will costs more in Canadian Dollars

5. Which of the following statements about an incorrectly calculated WACC is true?

1. If the WACC is incorrectly too high, the company will accept some projects that it should reject
2. If the WACC is incorrectly too low, the company will reject some projects that it should accept
3. An incorrect WACC is not important as it has no bearing on the long-term profitability of the company
4. If the WACC is incorrectly too low, the company will accept some projects that it should reject