1. The process of determining present value removes the cost of interest from future cash flows to determine the value of the amount today.
2. True
3. False

1 points

QUESTION 2

1. Managers may be discouraged from using present value techniques for evaluating investments because of the way in which their own performance is evaluated.
2. True
3. False

1 points

QUESTION 3

1. Which of the following isnotconsidered a capital budgeting project?
3. a.
4. Purchase of a new packaging machine
6. b.
7. Purchase of land on which to build a new factory
9. c.
10. Purchase of a new delivery truck to replace an old truck
12. d.
13. Purchase of inventory to be sold in the future

1 points

QUESTION 4

1. In evaluating an investment opportunity, a company must know how much cash it receives from or pays for an investment and the timing of the cash flows because receipts and payments that occur in the future are worth more than those that occur earlier.
2. True
3. False

1 points

QUESTION 5

1. The basic concept involved in time value of money calculations is that
3. a.
4. it is better to receive a dollar today than to receive a dollar in the future.
6. b.
7. incremental revenues must exceed incremental costs.
9. c.
10. you get what you measure.
12. d.
13. revenue must be earned in order for net income to be generated

1 points

QUESTION 6

1. Your required rate of return is greater than zero. How much is a payment of $3,000 to be received a year from today worth?
3. a.
4. Less than $3,000 today
6. b.
7. Exactly $3,000 today
9. c.
10. More than $3,000 today
12. d.
13. Not enough information is provided to determine the answer.

1 points

QUESTION 7

1. Soft benefits are those that often have a significant nonfinancial impact on an investment decision and as such, should be included in the decision analysis.
2. True
3. False

1 points

QUESTION 8

1. Riskier investments demand lower rates of return.
2. True
3. False

1 points

QUESTION 9

1. In which of the following situations will an annuity table be useful?
2. I.Calculating the net present value of an investment with equal cash flows for the first nine years, but a different flow in year 10
3. II.Calculating the internal rate of return of an investment with unequal cash flows each year
4. III. Calculating the net present value of an investment with an equal cash flow in years one through four, and a different equal cash flow in years 5 through 10
6. a.
7. I, II, and III
9. b.
10. II and III
12. c.
13. I and III
15. d.
16. I and II

1 points

QUESTION 10

1. Present value techniques
3. a.
4. determine the effects of time value of money on future net income that will be generated.
6. b.
7. are a way of converting future dollars into their equivalent current dollars.
9. c.
10. provide more conservative results than similar time value of money computations.
12. d.
13. treat a dollar received today to be worth the value of a dollar to be received a year from today.

1 points