16. The IRR (Internal Rate of Return) is best described as a. Management's required rate of return on capital investment projects b. The industry average rate of return on capital investment projects c. The rate of return that causes a project's NPV to equal zero d. The discount rate that causes a project's NPV to equal management's budgeted amount 7. Which of the following characteristics is not usual for common stock? a. Each share has a voting right b. Is the first type of stock sold when the entity sells stock c. Requires the payment of dividends d. None of the above all are usual characteristics for common stock) 6. Without financial intermediaries the cost of funds (capital) would likely be a. Higher b. Lower c. Tax deductible d. Equal to zero 5. A positive NPV (on a capital budgeting project) means that a. the project's discounted Internal Rate of Return (IRR) exceeds the hurdle rate b. the project's discounted Internal Rate of Return (IRR) is showing a net loss c. the project's discounted Internal Rate of Return (IRR) is lower than the hurdle rate d. None of the above 3. Capital budgeting project analysis focuses primarily upon a. Net operating income b. Net income after tax c. Revenue d. Cash Flow 4. The capital market focuses primarily on the issuance of financial securities a. That only pay interest b. That have specific collateral c. That have a normal life beyond one year d. Issued by banks 1. (From the perspective of the investor) Given the risk characteristics of the identified financial instruments which ordering is the likely rank from highest rate of return to lowest rate of return. a. Corporate Bonds, Preferred Stock, Common Stock b. Preferred Stock, Corporate Bonds, Common Stock c. Preferred Stock, Common Stock, Corporate Bonds d. Common Stock, Preferred Stock, Corporate Bonds e. Common Stock, Corporate Bonds, Preferred Stock TVM factors 2. Capital budgeting models make the most use of a. Future Value of a Single Sum b. Future Value of an Annuity c. Present Value of an Annuity d. None of the above are used with much frequency