公司理財(英文版)題庫7

…………………………最新資料推薦…………………CHAPTER7NetPresentValueandOtherInvestmentRulesMultipleChoiceQuestions:DEFINITIONSNETPRESENTa 1. Thedifferencebetweenthepresentvalueofaninvestmentanditscostisthe:fitabilityindex.discountedpaybackperiod.Difficultylevel:EasyNETPRESENTVALUERULEc 2. Whichoneofthefollowingstatementsconcerningnetpresentvalue(NPV)iscorrect?Aninvestmentshouldbeacceptedif,andonlyif,theNPVisexactlyequaltozero.AninvestmentshouldbeacceptedonlyiftheNPVisequaltotheinitialcashflow.AninvestmentshouldbeacceptediftheNPVispositiveandrejectedifitisnegative.Aninvestmentwithgreatercashinflowsthancashoutflows,regardlessofwhenthecashflowswillalwayshaveapositiveNPVandthereforeshouldalwaysbeaccepted.Anyprojectthathaspositivecashflowsforeverytimeperiodaftertheinitialinvestmentshouldaccepted.Difficultylevel:EasyPAYBACKc 3. Thelengthoftimerequiredforaninvestmenttogeneratecashflowssufficienttorecovertheinitialcostoftheinvestmentiscalledthe:fitabilityindex.discountedcashperiod.Difficultylevel:EasyPAYBACKRULEa 4. Whichoneofthefollowingstatementsiscorrectconcerningthepaybackperiod?Aninvestmentisacceptableifitscalculatedpaybackperiodislessthansomepre-specifiedperiodtime.Aninvestmentshouldbeacceptedifthepaybackispositiveandrejectedifitisnegative.Aninvestmentshouldberejectedifthepaybackispositiveandacceptedifitisnegative.Aninvestmentisacceptableifitscalculatedpaybackperiodisgreaterthansomepre-specifiedperiodoftime.Aninvestmentshouldbeacceptedanytimethepaybackperiodislessthanthediscountedpaybackperiod,givenapositivediscountrate.Difficultylevel:EasyDISCOUNTEDPAYBACK……………最新資料推薦……………最新資料推薦…………………e 5.a.b.c.d.e.

Thelengthoftimerequiredforaproject’sdiscountedcashflowstoequaltheinitialcostoftheprojectiscalledthe:ernalrateofreturn.paybackperiod.discountedprofitabilityindex.discountedpaybackperiod.Difficultylevel:EasyDISCOUNTEDPAYBACKRULEd 6. Thediscountedpaybackrulestatesthatyoushouldacceptprojects:whichhaveadiscountedpaybackperiodthatisgreaterthansomepre-specifiedperiodoftime.ifthediscountedpaybackispositiveandrejectedifitisnegative.onlyifthediscountedpaybackperiodequalssomepre-specifiedperiodoftime.ifthediscountedpaybackperiodislessthansomepre-specifiedperiodoftime.onlyifthediscountedpaybackperiodisequaltozero.Difficultylevel:EasyAVERAGEACCOUNTINGRETURNc 7. Aninvestment’saveragenetincomedividedbyitsaveragebookvaluedefinestheaverage:fitabilityindex.paybackperiod.Difficultylevel:EasyAVERAGEACCOUNTINGRETURNRULEb 8. Aninvestmentisacceptableifitsaverageaccountingreturn(AAR):islessthanatargetAAR.exceedsatargetAAR.exceedsthefirm’sreturnonequity(ROE).islessthanthefirm’sreturnonassets(ROA).isequaltozeroandonlywhenitisequaltozero.Difficultylevel:EasyINTERNALRATEOFRETURN9. Thediscountratethatmakesthenetpresentvalueofaninvestmentexactlyequalzeroiscalledthe:fitabilityindex.equalizer.Difficultylevel:EasyINTERNALRATEOFRETURNRULE10. AninvestmentisacceptableifitsIRR:isexactlyequaltoitsnetpresentvalue(NPV).isexactlyequaltozero.islessthantherequiredreturn.exceedstherequiredreturn.isexactlyequalto100percent.Difficultylevel:EasyMULTIPLERATESOFRETURN11. ThepossibilitythatmorethanonediscountratewillmaketheNPVofaninvestmentequaltozerocalledthe presentvalueprofilingoperationalambiguitymutuallyexclusiveinvestmentdecisionissuesofscalemultipleratesofreturnDifficultylevel:MediumMUTUALLYEXCLUSIVEPROJECTSc 12. Asituationinwhichacceptingoneinvestmentpreventstheacceptanceofanotherinvestmentisthe:netpresentvalueprofile.operationalambiguitydecision.mutuallyexclusiveinvestmentdecision.issuesofscaleproblem.multiplechoicesofoperationsdecision.Difficultylevel:EasyPROFITABILITYINDEX13. Thepresentvalueofaninvestment’sfuturecaseoteitlcostoftheinvestmentiscalledthe:fileperiod.Difficultylevel:EasyPROFITABILITYINDEXRULEa 14. Aninvestmentisacceptableiftheprofitabilityindex(PI)oftheinvestmentis:greaterthanone.lessthanone.greaterthantheinternalrateofreturn(IRR).lessthanthenetpresentvalue(NPV).greaterthanapre-specifiedrateofreturn.Difficultylevel:EasyCONCEPTSNETPRESENTVALUEd 15. Allelseconstant,thenetpresentvalueofaprojectincreaseswhen:thediscountrateincreases.eachcashinflowisdelayedbyoneyear.theinitialcostofaprojectincreases.therateofreturndecreases.allcashinflowsoccurduringthelastyearofaproject’slifeinsteadofperiodicallythroughoutthelifeoftheproject.Difficultylevel:EasyNETPRESENTVALUEa 16. Theprimaryreasonthatcompanyprojectswithpositivenetpresentvaluesconsideredacceptableisthat:theycreatevaluefortheownersofthefirm.theproject’srateofreturnexceedstherateofinflation.theyreturntheinitialcashoutlaywithinthreeyearsorless.therequiredcashinflowsexceedtheactualcashinflows.theinvestment’scostexceedsthepresentvalueofthecashinflows.Difficultylevel:EasyNETPRESENTVALUEd 17. Ifaprojecthasanetpresentvalueequaltozero,then:thepresentvalueofthecashinflowsexceedstheinitialcostoftheproject.theprojectproducesarateofreturnthatjustequalstheraterequiredtoacceptproject.theprojectisexpectedtoproduceonlytheminimallyrequiredcashinflows.anydelayinreceivingtheprojectedcashinflowswillcausetheprojecttohavenegativenetpresentvalue.IIandIIIonlyIIandIVonlyI,II,andIVonlyII,III,andIVonlyI,II,andIIIonlyDifficultylevel:MediumNETPRESENTVALUE18. Netpresentvalue:cannotbeusedwhendecidingbetweentwomutuallyexclusiveprojects.ismoreusefultodecisionmakersthantheinternalrateofreturnwhencomparingdifferentsizedprojects.iseasytoexplaintonon-financialmanagersandthusistheprimarymethodofanalysisusedbythelowestlevelsofmanagement.isnotanaswidelyusedtoolaspaybackanddiscountedpaybackisverysimilarinitsmethodologytotheaverageaccountingreturn.Difficultylevel:EasyPAYBACK19. Paybackisfrequentlyusedtoanalyzeindependentprojectsbecause:itconsidersthetimevalueofmoney.allrelevantcashflowsareincludedintheanalysis.itiseasyandquicktocalculate.itisthemostdesirableofalltheavailableanalyticalmethodsfromafinancialperspective.itproducesbetterdecisionsthanthosemadeusingeitherNPVorIRR.Difficultylevel:EasyPAYBACK20. Theadvantagesofthepaybackmethodofprojectanalysisincludethe:applicationofadiscountratetoeachseparatecashflow.biastowardsliquidity.easeofuse.arbitrarycutoffpoint.IandIIonlyIandIIIonlyIIandIIIonlyIIandIVonlyII,III,andIVonlyDifficultylevel:MediumPAYBACK21. Allelseequal,thepaybackperiodforaprojectwilldecreasewheneverthe:initialcostincreases.requiredreturnforaprojectincreases.assigneddiscountratedecreases.cashinflowsaremovedforwardintime.durationofaprojectislengthened.Difficultylevel:MediumDISCOUNTEDPAYBACKd 22. Thediscountedpaybackperiodofaprojectwilldecreasewheneverthe:discountrateappliedtotheprojectisincreased.initialcashoutlayoftheprojectisincreased.timeperiodoftheprojectisincreased.amountofeachprojectcashflowisincreased.costsofthefixedassetsutilizedintheprojectincrease.Difficultylevel:MediumDISCOUNTEDPAYBACK23. Thediscountedpaybackrulemaycause:jectswithnegativenetpresentvaluestobeaccepted.someprojectstobeacceptedwhichwouldotherwiseberejectedunderthepaybackrule.Difficultylevel:EasyINTERNALRATEOFRETURN24. Theinternalrateofreturn(IRR):rulestatesthataprojectwithanIRRthatislessthantherequiredrateshouldaccepted.istherategeneratedsolelybythecashflowsofaninvestment.istheratethatcausesthenetpresentvalueofaprojecttoexactlyequalzero.caneffectivelybeusedtoanalyzeallinvestmentscenarios.IandIVonlyIIandIIIonlyI,II,andIIIonlyII,III,andIVonlyI,II,III,andIVDifficultylevel:MediumINTERNALRATEOFRETURNa 25. Theinternalrateofreturnforaprojectwillincreaseif:theinitialcostoftheprojectcanbereduced.thetotalamountofthecashinflowsisreduced.eachcashinflowismovedsuchthatitoccursoneyearlaterthanoriginallyprojected.therequiredrateofreturnisreduced.thesalvagevalueoftheprojectisomittedfromtheanalysis.Difficultylevel:MediumINTERNALRATEOFRETURNc 26. Theinternalrateofreturnis:morereliableasadecisionmakingtoolthannetpresentvaluewheneveryouconsideringmutuallyexclusiveprojects.equivalenttothediscountratethatmakesthenetpresentvalueequaltoone.difficulttocomputewithouttheuseofeitherafinancialcalculatororacomputer.dependentupontheinterestratesofferedinthemarketplace.abettermethodologythannetpresentvaluewhendealingwithunconventionalflows.Difficultylevel:MediumINTERNALRATEOFRETURNa 27. Theinternalrateofreturntendstobe:easierformanagerstocomprehendthanthenetpresentvalue.extremelyaccurateevenwhencashflowestimatesarefaulty.ignoredbymostfinancialanalysts.usedprimarilytodifferentiatebetweenmutuallyexclusiveprojects.utilizedinprojectanalysisonlywhenmultiplenetpresentvaluesapply.Difficultylevel:EasyINCREMENTALINTERNALRATEOFRETURNe 28. YouaretryingtodeterminewhethertoacceptprojectAorprojectB.Theseprojectsaremutuallyexclusive.Aspartofyouranalysis,youshouldcomputetheincrementedIRRbydetermining:theinternalrateofreturnforthecashflowsofeachproject.thenetpresentvalueofeachprojectusingtheinternalrateofreturnasthediscountrate.thediscountratethatequatesthediscountedpaybackperiodsforeachproject.thediscountratethatmakesthenetpresentvalueofeachprojectequalto1.theinternalrateofreturnforthedifferencesinthecashflowsofthetwoprojects.Difficultylevel:MediumINCREMENTALINTERNALRATEOFRETURNb 29. GraphingtheincrementalIRRhelpsexplain:whyoneprojectisalwayssuperiortoanotherproject.howdecisionsconcerningmutuallyexclusiveprojectsarederived.howthedurationofaprojectaffectsthedecisionastowhichprojecttoaccept.howthenetpresentvalueandtheinitialcashoutflowofaprojectarerelated.howtheprofitabilityindexandthenetpresentvaluearerelated.Difficultylevel:MediumPROFITABILITYINDEXd 30. Theprofitabilityindexiscloselyrelatedto:presentvalue.mutuallyexclusiveprojects.Difficultylevel:EasyPROFITABILITYINDEXb 31. Analysisusingtheprofitabilityindex:ducesresultswhichtypicallyaredifficulttocomprehendorapply.Difficultylevel:MediumPROFITABILITYINDEXe 32. Ifyouwanttoreviewaprojectfromabenefit-costperspective,youshouldusethe presentvaluepaybackinternalrateofreturnaverageaccountingreturnprofitabilityindexDifficultylevel:EasyPROFITABILITYINDEX33. Whenthepresentvalueofthecashinflowsexceedstheinitialcostofaproject,theprojectshouldbe:acceptedbecausetheinternalrateofreturnispositive.acceptedbecausetheprofitabilityindexisgreaterthan1.acceptedbecausetheprofitabilityindexisnegative.rejectedbecausetheinternalrateofreturnisnegative.rejectedbecausethenetpresentvalueisnegative.Difficultylevel:EasyMUTUALLYEXCLUSIVEPROJECTS34. Whichoneofthefollowingisthebestexampleoftwomutuallyexclusiveprojects?planningtobuildawarehouseandaretailoutletsidebysidebuyingsufficientequipmenttomanufacturebothdesksandchairssimultaneouslyusinganemptywarehouseforstorageorrentingitentirelyouttoanotherfirmusingthecompanysalesforcetopromotesalesofbothshoesandsocksbuyingbothinventoryandfixedassetsusingfundsfromthesamebondissueDifficultylevel:MediumMUTUALLYEXCLUSIVEPROJECTS35. TheLibertyCo.isconsideringtwoprojects.ProjectAconsistsofbuildingawholesalebookoutletonlot#169oftheEnglewoodRetailCenter.ProjectBconsistsofbuildingasit-downrestaurantonlot#169oftheEnglewoodRetailCenter.Whentryingtodecidewhetherorbuildthebookoutletortherestaurant,managementshouldrelymostheavilyontheanalysisresultsfromthe fitabilityindexinternalrateofreturnpaybacknetpresentvalueaccountingrateofreturnDifficultylevel:MediumMUTUALLYEXCLUSIVEPROJECTSc 36. Whentwoprojectsbothrequirethetotaluseofthesamelimitedeconomicresource,theprojectsaregenerallyconsideredtobe:ernallyprofitable.Difficultylevel:EasyMUTUALLYEXCLUSIVEPROJECTSc 37. Mattisanalyzingtwomutuallyexclusiveprojectsofsimilarsizeandhaspreparedfollowingdata.Bothprojectshave5yearlives.ProjectAProjectBNetpresentvalue$15,090$14,693PaybackperiodAverageaccountingreturn2.76years9.3percent2.51years9.6percentRequiredreturn8.3percent8.0percentRequiredAAR9.0percent9.0percentMatthasbeenaskedforhisbestrecommendationgiventhisinformation.Hisrecommendationshouldbetoaccept:projectBjectAandrejectprojectBjectBandrejectprojectAjectBandrejectprojectAbasedonboththepaybackperiodandtheaverageaccountingreturn.Difficultylevel:MediumINVESTMENTANALYSISa 38. Giventhatthenetp