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plz answer now 2. For mutually exclusive projects, the project with the higher IRR is the correct selection. ( ) 3. A project that simply
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2. For mutually exclusive projects, the project with the higher IRR is the correct selection. ( ) 3. A project that simply breaks evea en an accounting busis gives you your moncy back but does not cover the opportunity cost of the capital tied up in the project. ( ) 4. Capital bedgeting analysis focuses oe cash flow as opponed to peofits. ( ) Part 2 Multiple Choice Questions (5 points each, 25% in total) 1. Which one of the following capital bodgeting proposals is most apt to be associased with a conflict of interests? A The proposal with the highest NPV B. The proposal with the longest paytack period C. The proposal with the highest IRR and quickest payback. D. The groposal to solve pollutice problents cited by the EPA 2. What is the change in the NPV of a coneyear projoct if fived costs are increased from $400 to $600, the firm is profitable, has a 35% tax rate, and employs a 12% cost of capital? A. 5200.00 B. 5178,57 C. 5130.00 D. 5116.07 3. Which one of the following changes, if of a seffeiczet marguitude, could turn a negative NPV project into a positive NPV project? A. A decrease in the estimated annual sales B. An increase in the discount rate C. An increase in the initial investmeat D. A decrease in the fixed costs 4. A firm is considering a project with the following cash flows: Time 0=+$20,000, Years 15=$4,500. Should the project be accepted if the cost of capital is 10%? A. Yes; The IRR of the project is 4.06%. B. Yes; The IRR of the project is 12.5%. C. No; The IRR of the project is 4.06%. D. No; The IRR of the project is 12.5%. 5. The NPV of an investment proposal becomes negative as a result of allocating a portion of the corporation president's salary. It is most likely the case that: A. the project should be accepted. B. rejecting the project is the correct decision. C. the allocation should be postponed until the project is accepted. D. the salary should be considered an opportunity cost of the project Step by Step Solution
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