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Unit 4 principles of finance Theoretically, a company comparing multiple projects with similar investment requirements and durations would select projects with __________.the highest IRRTheoretically, a company comparing multiple long-term projects would select to invest in those with __________ payback period.the briefestTheoretically, a company would dispense with plans for a long-term project whose net present value __________.falls below zeroA company is considering investing $90,000 in a project with the following anticipated net cash flows:Year 1: $19,000Year 2: $12,000Year 3: $14,000Year 4: $22,000Year 5: $17,000Year 6: $13,000In what year will payback occur?Year 6Select one advantage of IRR as a capital budget method.a.)It accounts for the different value of money over time.Select one disadvantage of IRR as acapitalbudget method.The IRR can be inaccurate due to risks related to reinvestment.Select one advantage of IRR as a capital budget method.It is relatively simple and easily comprehensible.What is one disadvantage of NPV as a capital budget method?It is not very good at accounting for opportunity cost.What is one advantage of NPV as a capital budget method?It is a useful tool for comparing multiple investment options regardless of the duration of each.What is one advantage of NPV as a capital budget method?It is easy to understand and interpret when making investment choices.__________, like research and development, that already occurred should notbe part of cash flow analysis in the capital budgeting process.Sunk costsAlthough __________ is recorded as an expense on the cash flow statement, it is not included as part of cash flow in the capital budgeting process.DepreciationWhen considering a replacement project, __________ must be included in thecash flow analysis.salvage value
Unit 4 principles of finance Which of the following is an example of a market risk for a company that manufactures automobiles?Rising tariffs that increase the price of automobiles sold overseas, thereby reducing demandWhich of the following is an example of a financial risk for a company that manufactures automobiles?A car rental agency defaulting on a contract to buy a large volume of automobilesWhich of the following is an example of an operational risk for a company that manufactures automobiles?Disruption to the supply chain of material, due to domestic unrest in the source countrySelect one reason why a company would want to go private.To have fewer administrative expenses associated with securities regulationWhat is one potential advantage of being a privately-held company?Certain investors may find the ability to retain control over the company attractive.Select one reason why a company would want to go public.To have access to a large magnitude of fundingWhich of the following types of financing is typical for a business in its introduction stage?Bank loansWhich of the following types of financing is typical for a business in its mature stage?Issuing bondsWhich of the following types of financing is typical for a business in its growth stage?