41. Wou,d you accept a project whick is expected to pay 10 000 $ a year for seven years if the initial investment is 40 000$ and your required return is 15%?

a) no the nvp is -1 369$

b) yes the nvp is 4238$

c) no the npv is -2783$

e) yes the npv is 1604$

42. What is the payback period of a 40 000$ investement with the following cash flows ?

Year 1. : 20 000$

Year 2 : 25 000$

Year 3. : 10 000$

Year 5 : 5000$

1. 2.25 years
2. 3.50 years
3. 1 year
4. 2 years
5. 1.80 years

44. The average account rate of return is most similar to which one the following ratios ?

a) return on assets

b) return on quity

c) profit margin

d) payout ratio

e) plowback ratio

45. An investment is acceptable if its average accounting return AAR

a) is less than a target AAR

b) is less than the firms return on assets (ROA)

c ) exceeds the firms returns on quity

d) is equal to sexo and only when it is equal to sezo

e) exceeds a target AAR

46. The internal rate of return tends to be :

a) easier for managers to comprehend than the net present valeue

b) used primarly yo differentiate between mutally exclusive projects

c) extreneky accurate even when cash flow estimates are faulty

d) utilised in projet analysis only when multiple net present value apply

e) ignored by most financial analysts

47. a 25 year project has a cost of 1 500 000 and has a annual cash flow of 4000 000 in years 1-15 and 200 000$in years 16-25. The companys required rate is 14% given this information, calculate the discounted payback of the project.

a) 5.5 years

b) 5.90 years

c) 5.70 years

d) 6.30 years

e) 6.10 years

48. If a project is assigned a required rate of return equal to zero then

1. Whether the project is accepted or rejected will depend on the timing of the cash flow
2. B) the project will always be rejected
3. C) the project will always be accepted
4. D) the project can never add value for the shareholders
5. E) the timing of the projects cash flows has no bearing on the value of the project.

26. Calculate the geometric return of an investment with 5 years of return of 15%, 10%, 5%, (5%) and (10%)

a) 5.23%

b) 11.38%

c) 3%

d) 9.41%

e) 13.57%