Chapter 10 Practice Questions

The weighted average cost of capital 14 which of the

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Unformatted text preview: d average cost of capital ____ 14. Which of the following tasks uses compound interest tables? a. preparing operating budgets b. calculating the accounting rate of return c. calculating RRSPs d. evaluating break-even points ____ 15. What can be concluded when the NPV is 0? a. The undiscounted cash inflows equal the discounted cash outflow. b. The discounted cash inflows equal the cash outflow. c. The undiscounted cash inflows equal the undiscounted cash outflow. d. The discounted cash outflow equals the undiscounted cash inflows. Problem Note: Use the interest tables contained at the end of the textbook and/or a financial calculator to do the following exercises with this additional information: Year 0 1 2 3 - $ 125,000 + 50,000 + 50,000 + 50,000 Assume a 10% interest rate. 1. The undiscounted value of the cash outflow is __________________________. 2. The undiscounted value of the cash inflow is __________________________. 3. The undiscounted present value of the net cash flow is __________________________. 4. The discounted present value of the cash inflow is_________________________. 5. The net present value of the discounted cash flow is __________________________. Chapter 10 Practice Questions Answer Section MULTIPLE CHOICE 1. ANS: BLM: 2. ANS: BLM: 3. ANS: BLM: 4. ANS: BLM: 5. ANS: BLM: 6. ANS: BLM: 7. ANS: BLM: 8. ANS: BLM: 9. ANS: BLM: 10. ANS: BLM: 11....
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