1)Preference decisions compare potential projects that meet screening decision criteria and will be ranked in their preference order to differentiate between alternatives with respect to all of the following characteristicsexcept________________________________________.

A.importance

B.desirability

C.feasibility

D.political prominence

2) You are explaining time value of money factors to your friend. Which factor would you explain as being larger?

A.The future value of $1 for 12 periods at 6% is larger

B.there is not enough information given to answer this question

C.neither one is larger because they are equal

D.the present value of $1 for 12 periods at 6% is larger

3) You want to invest $8,000 at an annual interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years?

A.present value of one dollar (1$)

B.future value of one dollar ($1)

C.future value of an ordinary annuity

D.present value of an ordinary annuity

4) Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each year for the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan?

A.$23,500

B.$14,000

C.$80,000

D.$94,000

5) The process of reinvesting interest earned to generate additional earnings over time is ________________________________.

A.discounting

B.compounding

C.annuity

D.lump-sum

6) Which of the following does not assign a value to a business opportunity using time-value measurement tools?

A.discounted cash flow model

B.internal rate of return (IRR) method

C.payback period method

D.net present value (NPV)

7) This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero.

A.new present value (NPV)

B.future value method

C.discounted cash flow method

D.internal rate of return (IRR) method

8)When using the NVP method for a particular investment decision, if the present value of all cash inflows is greater than the present value of all cash outflows, then _______________________________.

A.the investment provides an actual rate of return equal to the discount rate

B.the investment provides an actual rate of return greater than the discount rate

C.the discount rate used was too high

D.the discount rate is too low

9) What are the steps involved in the process for capital decision-making?