1. QUESTION 13

   It is important to get investment decisions right for which of the following reasons?

   		They may affect the business for many years.
   		Large amounts of resources are often involved.
   		They can be difficult and/or expensive to "bail-out" of once started.
   		All of the above.

   1 points

   QUESTION 14

   Martin Short, Managing Director of Mills Ltd, has received a report from his Finance Manager recommending four investment projects for his approval however, the firm has only sufficient funds to invest in one project. The firm's rate of return is 6%. The Accounting Rate of Return for each project is: A = 10%, B = 8%, C= 12%, D = 14%. Short will select:

   		Project A.
   		Project B.
   		Project C.
   		Project D.

   1 points

   QUESTION 15

   McLeod Constructions, a manufacturing firm, is considering investing $330,000 in new equipment. It is estimated that the net cash flow per year will be $75,000 and the equipment will have a 10-year useful life. There is no residual value expected at the end of the 10-year life. The accounting rate of return is:

   		10.55%
   		15.86%
   		25.45%
   		22.72%

   1 points

   QUESTION 16

   The statement concerning with the ARR and the payback methods that is not correct is:

   		Both methods are based on accounting profits
   		If two projects have the same ARR the one with the lowest payback period would be preferred
   		Both methods are simplistic and may be useful for a quick analysis to sort out projects for further analysis
   		Both methods are quite easy for managers to understand
   		None of the statements is incorrect

1 points