Question 1

What of the following project is a non-normal cash flow project?

		Project cost (negative CF) is followed by a series of positive cash inflows.
		Project cost (negative CF) is followed by a series of positive cash inflows and a final negative cash flow when closing the project.
		Project cost (negative CF) is followed a negative cash flows and then a series of positive cash inflows.
		Project cost (negative CF) is followed two years negative cash flows and then a series of positive cash inflows.

Question 2

Whats the weakness of the discounted payback period?

Provides an indication of a projects risk and liquidity.

Ignores the time value of money.

Ignores cash flows occurring after the payback period.

Both (B) and (C) correct

Question 3

A firm is considering an investment project with the following cash flows: Year 0 = -$150,000 (initial costs); Year 1= $40,000; Year 2 =$90,000; and Year 3 = $30,000; and Year 4 = $60,000. The company has a 10% cost of capital, calculate the IRR for the project.

		10.0%
		14.2%
		17.2%
		19.7%

Question 4

Two projects are mutually exclusive if the cash flows of one are unaffected by the acceptance of the other, but independent if the cash flows of one can be adversely impacted by the acceptance of the other.

True

False