Chapter 11 Quiz - Chapter 11 Quiz Based on all the...

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Based on all the information presented in lecture, which capital budgeting decision rule has the fewest inherent flaws and is generally regarded as the “best” method? Student response: a. Net present value (NPV) Score:1 / 1 Question 2 (1 point) Projects with _______ cash flow streams _______ have multiple internal rates of return (IRRs). Student response: d. Non-normal . .. sometimes Score:1 / 1 Question 3 (1 point) Project M has an initial cost of $44,240, and its expected net cash inflows are $9,250 per year for 10 years. The firm has a WACC of 11 percent, and Project M’s risk would be similar to that of the firm’s existing assets. Calculate the net present value (NPV) of Project M. Student response: e. $10,235.40 Score:1 / 1 Question 4 (1 point) Project Z has an initial cost of $59,826, and its expected net cash inflows are $12,500 per year for 8 years. The firm has a WACC of 10 percent, and Project Z’s risk would be similar to that of the firm’s existing assets. Calculate Project Z’s internal rate of return (IRR). Student response:
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This note was uploaded on 07/25/2011 for the course FINC 3334 taught by Professor Whitworth during the Winter '10 term at University of Houston.

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Chapter 11 Quiz - Chapter 11 Quiz Based on all the...

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