Basics_in_Finance_9_Questions_CoolDowners_Solutions

Basics_in_Finance_9_Questions_CoolDowners_Solutions -...

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Questions related to Chapter 9 International Management Programme – Basics in Finance – Prof. Dr. Marcus Labbé School of Business ± True/False Questions 1. In capital budgeting, the preferred approaches in assessing whether a project is acceptable are those that integrate time value procedures, risk and return considerations, and valuation concepts. TR 2. In the case of annuity cash inflows, the payback period can be found by dividing the initial investment by the annual cash inflow. TR 3. The payback period is the exact amount of time required for the firm to recover the installed cost of a new asset. FA 5. By measuring how quickly the firm recovers its initial investment, payback period gives some implicit consideration to the timing of cash flows and therefore to the time value of money. TR 6. One strength of payback period is that it takes fully into account the time factor in the value of money. FA
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Questions related to Chapter 9 International Management Programme – Basics in Finance – Prof. Dr. Marcus Labbé School of Business 11. Net present value is considered a sophisticated capital budgeting technique since it gives explicit consideration to the time value of money. TR 12. The discount rate, required return, cost of capital, or opportunity cost is the minimum return that must be earned on a project to leave the firm’s market value unchanged. TR
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Basics_in_Finance_9_Questions_CoolDowners_Solutions -...

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