Question 1 Not yet answered Marked out of 1.00 '7 Flag question The profitability index is useful for comparing: Select one: 0 O O O a. Investment alternatives of similar risk levels. b. Investment alternatives requiring significantly different initial investments and discounted cash flows. c. Investment alternatives of similar amount. d. Investment alternatives spanning different industries. magic\" 2 Suppose you purchases an asset for $80,000. This asset provides you with net additional cash flows of $20,000 per Not yet year for each of the next 5 years after which time the asset will be scrapped. The internal rate of return (IRR) with answered respect to the machine is: Marked out of 1'00 Select one: V \"fig 0 a. 20% question 0 b. 7.93% O c. 10% O d.'|2.5% Question 3 Not yet answered Marked out of 1.00 P Flag question The accounting rate of return (ARR) method: Select one: 0 O O O a. is a discounted capital budgeting approach. b. does not take the time value of money into consideration. 0. uses cash flow information instead of net income d. does not consider the amount of the initial investment Question 4 Not yet answered Marked out of 1.00 F Flag question What is the difference between non-discounted and discounted capital budgeting approaches? Select one: 0 a. Unlike the non-discounted approach, the discounted approach does not consider time value of money. 0 b. Unlike the discounted approach, the non-discounted approach only evaluates assets that have a life of five years. 0 c. Compared to the nondiscounted approach, managers find the discounted approach less beneficial. C) d. Unlike the non-discounted approach, the discounted approach considers time value of money. Question 5 Not yet answered Marked out of too '7 Flag question What is an annuity? Select one: 0 O O O a. A stream of fixed payments that are received or made in a given period of time b. It is the current worth of the future sum of money, given a specified time period and interest rate c A technique that measures the length of time it takes a business to recover an initial outlay in an investment d. A stream of irregular payments that are received or made in a given period of time QUBSHO\" 6 Bobby Choco is considering purchasing a $14,500 machine. The machine will decrease annual operating costs by Not yet $2,000. All operating costs are cash items. Assume the useful life of the asset is 8 years and that the required rate of answers\" return is 6%. What is the net present value of this investment and should Bobby invest in this machine? Marked out of 1'00 Select one: '7 mfg O a. $2,080, yes question 0 b. -$2,080, no 0 c, $2,080, no 0 d. $12,420, yes QUEStiO\" 8 Using the internal rate of return, a project is accepted if the IRR: Not yet answered Select one: 1M3?\" 0m 0f 0 a. produces an NPV equal 0 '7 Flag 0 b. is less than the required rate of return ques'ion O c is greater than the required rate of return 0 d. is equal to the required rate of return Question 9 Not yet answered Marked out of 1.00 '7 Flag question Which one of the following statements regarding the cost of capital is false? Select one: 0 O O O a. The cost of capital is often used as the discount rate in investment decisions. b. The cost of capital is referred to as the minimum rate of return that investors expect from a capital expenditure, 0. The cost of a capital incorporates a company's cost of debt (rate paid to lenders) and the cost of equity (rate paid to stockholders) d. If a potential investment will yield a return that is less than the cost of capital, it should be accepted. QUEStiO\" 10 Suppose that two years ago a company invested in Project A and its main competitor invested in Project B. Both Not yet Project A and Project B had the same initial cash outlay and applied the same annual interest rate. Project A earned answer\" simple interest and Project B earned compound interest. If interest is applied annually, which of the following Marked 0\" 01' statements is true? 100 V F'39 Select one: question 0 a. Project A has earned more interest to date than Project B. b. Project A is a more attractive investment than Project B. O O 0. Project A has earned the same amount of interest to date as Project B, 0 d. Project A has earned less interest to date than Project B