eng120-fall04-mt2-Oren-soln

eng120-fall04-mt2-Oren-soln - E120 Principles of...

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E120: Principles of Engineering Economics Midterm Exam 2 Instructor: Professor Shmuel Oren Part 1: Concepts. (25 points) 1. circle the only correct answer. You will receive 5 points for each correct answer, 0 for each unanswered question, and -1 for each incorrect answer. 1.1 Which of the following is a right of an owner of a share of common stock? a. The right to directly choose the auditing firm the company uses. b. The right to sue the company in bankruptcy proceedings if common dividends are not paid. c. The right to vote for directors d. The right to participate in any new debt offerings the company sells to public. e. Preference over preferred shareholders in the payment of dividends. 1.2 Which of the following criteria is/are biased in favor of liquid investments? I. payback period II. AAR III Discounted payback period a. I only b. III only c. I and II only d. I and III only e. I, II and III Note: due to the inconsistence between the handout and the text book. Both d and e are correct. 1.3 If a project with conventional cash flows has an IRR less than the required return,
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eng120-fall04-mt2-Oren-soln - E120 Principles of...

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