VERSION #1 1 M I M E 310 E N G I N E E R I N G E C O N O M YM I M E 310 E C O N O M Y Class Test #2 – Wednesday, 21 March, 2007 – 90 minutes PRINT your family name / initial and record your student ID number in the spaces provided below. FAMILY NAME / INITIAL S O L U T I O N S STUDENT ID # This test consists of 19 multipleThis test consists of 19 multiple-choice questions, and three problems requichoice questions, and three problems requiring ing a full solution. a full solution. There are no penalties for incorrect multiple-choice question an-swers. The problems are worth a total of 25 points. MULTIPLE-CHOICE QUESTIONS Circle the correct answer on this test paper and record it on the computer answer sheet. Questions 1 to 10 are worth 3 points each for a total of 30. 1. Which one of the following statements is most correct? A) The discounted payback period method overcomes the problem that the payback pe-riod method has with cash flows occurring beyond the payback period. B) The accounting rate of return method does take into consideration the cash flows be-yond the payback period. C) When selecting the most economical project among a series of mutually exclusive pro-jects, an incremental analysis approach can be used. D) Ranking conflicts can arise if one relies on the IRR criterion rather than the NPV crite-rion when a project has more than one net present value. E) None of the statements above are correct. 2. The internal rate of return of a project: #20: #21: #22: Total:
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