Quiz 2 Soltuion - Quiz II October 22, 2009 BA3341 Section...

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1 Quiz II October 22, 2009 BA3341 Section 004 Instructor: Natasha Polkovnichenko Name: _________________________ Please do not open the examination until you are told to do so. Instructions: The exam has 5 problems and 5 multiple-choice questions. Total number of points is 100. All books and notes MUST be closed. You may use your calculators. The last page contains formulas that you may find helpful. You may detach the page with formulas. For each of the multiple-choice questions, circle the best answer. You will not receive any points if you circle more than one answer. Be neat and show ALL your work to receive full credit. Partial credit will be given. You have 1 hour and 15 minutes to complete the exam. Do not consult with anyone while you are working on the exam. GOOD LUCK!!!
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2 Multiple Choice Questions Circle the correct answer. Each of the correct answers is worth 4 points. 1. When a project's internal rate of return equals its opportunity cost of capital, then: A) The project should be rejected. B) The project has no cash inflows. C) The net present value will be positive. D) The net present value will be zero. 2. When projects are mutually exclusive , selection should be made according to the project with the: A) Longer life. B) Larger initial size. C) Highest IRR. D) Highest NPV. 3. When mutually exclusive projects have different lives , the project which should be selected will have the: A) Highest IRR. B) Longest life. C) Lowest equivalent annual cost. D) Highest NPV, discounted at the opportunity cost of capital. 4. The decision rule for net present value is to: A) Accept all projects with cash inflows exceeding initial cost. B) Reject all projects with rates of return exceeding the opportunity cost of
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This note was uploaded on 11/24/2009 for the course BA 3341 taught by Professor Polkovnichenko during the Fall '08 term at University of Texas at Dallas, Richardson.

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Quiz 2 Soltuion - Quiz II October 22, 2009 BA3341 Section...

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