Question
3. Which of the following projects should you turn down? The project IRR is 14% and your requirement is that projects meet a 9% threshold.
3. Which of the following projects should you turn down?
| The project IRR is 14% and your requirement is that projects meet a 9% threshold. |
| The initial investment is $10mm and it produces 4 years of cash flows of $3mm per year. Your cost of capital is 9%. |
| The IRR is only 3%, but it has a positive NPV. |
| The project has a positive NPV of only $1 |
9. Assume Elon Musk wants to consider building a new motorcycle factory and is deciding between California, Mexico, and Texas. We would refer to these project options as:
| operating |
| dependent |
| independent |
| extraordinary |
| mutually exclusive |
10. When evaluating a project, the best metrics to use are:
| NPV and payback period |
| FASB and PI |
| SVA and NRR |
| Independent and exclusive |
| NPV and IRR |
11. A capital expenditure is:
| an expenditure that is greater than 5% of revenue. |
| any significant expenditure by a company. |
| an outlay of funds for a project that produces benefits that last for greater than one year. |
| equal to property plant and equipment. |
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