1. Which of the following statements about capital investment project scoring is most correct?

A. Project scoring is a technique that quantifies the social value of a project.

B. Project scoring examines the facilities of an organization to determine whether or not the organization can support the project.

C. Project scoring is a ranking technique that includes both financial and nonfinancial factors.

D. Project scoring assigns values to various diseases and then ranks projects according to their effectiveness in treating patients with those diseases.

E. Project scoring combines the payback, net present value, and internal rate of return values to create a single measure of financial attractiveness

2. Mercy Hospital is considering a project that is expected to reduce the hospitals annual operating costs by $250,000 per year beginning in year 1. In addition, the project is expected to generate $400,000 in revenue per year beginning in year 1. All else held constant, what is the projects expected net cash flow in year 1?

A. -$250,000

B. $150,000

C. $400,000

D. $650,000

E. $250,000

3. You have estimated the value of a planned project by finding the present value of all the cash inflows from that project. Which of the following would cause the project to look more appealing (have a greater net present value)?

A. The discount rate decreases.

B. The cash flows are extended over a longer period of time, but the total dollar amount of the cash flows remains the same.

C. Answers (a) and (b) are correct.

D. Answers (b) and (c) are correct.

E. The discount rate increases.

4. A project is estimated to have a net present value equal to $85,000. The risk-adjusted opportunity cost of capital is 15 percent. Which of the following statements is most correct?

A. The projects IRR is greater than 15 percent.

B. The projects IRR is equal to 15 percent.

C. The project should be rejected because its IRR cannot be calculated.

D. The projects internal rate of return (IRR) is less than 15 percent.

E. The projects IRR is zero.

5. Which of the following options provides the most information about a projects riskiness?

A. Certainty equivalent method

B. Monte Carlo simulation

C. Scenario analysis

D. Risk-adjusted discount rate method

E. Sensitivity analysis