HW_1_Questions_Chapters_8_9_10[1]

HW_1_Questions_Chapters_8_9_10[1] - HW 1 Chapters 8 and 9...

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HW 1 Chapters 8 and 9 Chapter 8 Questions 1-7, 13 Chapter 9 Questions 1, 5, 6, 16 Chapter 10 Questions 5, 8 Multiple Choice 1. A project's opportunity cost of capital is: A. the forgone return from investing in the project. B. the return earned by investing in the project. C. equal to the average return on all company projects. D. designed to be less than the project's IRR. 2. If the net present value of a project which costs $20,000 is $5,000 when the discount rate is 10%, then the: A. project's IRR equals 10%. B. project's rate of return is greater than 10%. C. net present value of the cash inflows is $4,500. D. project's cash inflows total $25,000. 3. What is the NPV of a project that costs $100,000 and returns $50,000 annually for three years if the opportunity cost of capital is 14%? A. $3,397.57 B. $4,473.44 C. $16,085.00 D. $35,000.00
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4. An investment of $20,000 will create a perpetual after-tax cash flow of $2,000. The required rate of return is 8 percent. What is the investment’s profitability index?
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This note was uploaded on 09/06/2011 for the course FIN 351 taught by Professor Li during the Spring '09 term at S.F. State.

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HW_1_Questions_Chapters_8_9_10[1] - HW 1 Chapters 8 and 9...

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