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.
Nonnormal .
.. 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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 Winter '10
 Whitworth
 Finance, Net Present Value, Internal rate of return, Student response

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