3010 Pexam3s01.mconly

3010 Pexam3s01.mconly - FNCE 3010 Practice Exam 3 Name S013...

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FNCE 3010 Practice Exam 3 Name: S013 1. A company is considering an expansion project. The company’s CFO plans to calculate the project’s NPV by discounting the relevant cash flows (which include the initial up- front costs, the operating cash flows, and the terminal cash flows) at the company’s cost of capital (WACC). Which of the following factors should the CFO include when estimating the relevant cash flows? a. Any sunk costs associated with the project. b. Any interest expenses associated with the project. c. Any opportunity costs associated with the project. d. Answers b and c are correct. e. All of the answers above are correct. 2. Other things held constant, which of the following would increase the NPV of a project being considered? 3. Which of the following statements is correct? 4. Suppose the firm’s WACC is stated in nominal terms, but the project’s expected cash flows are expressed in real dollars. In this situation, other things held constant, the calculated NPV would 1
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