55. You are considering a project with conventional cash flows and the following characteristics:Which of the following statements is correct given this information?I. The discount rate used in computing the net present value was less than 11.63 percent.II. The discounted payback period must be less than 2.98 years.III. The discount rate used in the computation of the profitability ratio was 11.63 percent.IV. This project should be accepted as the internal rate of return exceeds the required return. A. I and II onlyB. III and IV onlyC.I, II, and IV onlyD. II, III, and IV onlyE. I, II, III, and IVRefer to section 9.7AACSB: N/ABloom's: AnalysisDifficulty: IntermediateLearning Objective: 9-1Section: 9.7Topic: Capital budgeting methods9-74

Chapter 09 - Net Present Value and Other Investment Criteria56. Which of the following are definite indicators of an accept decision for an independent project with conventional cash flows?I. positive net present valueII. profitability index greater than zeroIII. internal rate of return greater than the required rateIV. positive internal rate of return Refer to section 9.7AACSB: N/ABloom's: KnowledgeDifficulty: BasicLearning Objective: 9-1Section: 9.7Topic: Capital budgeting methods9-75

Chapter 09 - Net Present Value and Other Investment Criteria57. What is the net present value of a project with the following cash flows if the required rate of return is 12 percent?AACSB: AnalyticBloom's: ApplicationDifficulty: BasicLearning Objective: 9-1Section: 9.1Topic: Net present value9-76

Chapter 09 - Net Present Value and Other Investment Criteria58. What is the net present value of a project that has an initial cash outflow of $34,900 and the following cash inflows? The required return is 15.35 percent.AACSB: AnalyticBloom's: ApplicationDifficulty: BasicLearning Objective: 9-1Section: 9.1Topic: Net present value9-77

Chapter 09 - Net Present Value and Other Investment Criteria59. A project will produce cash inflows of $3,200 a year for 4 years with a final cash inflow of $5,700 in year 5. The project's initial cost is $9,500. What is the net present value of this project if the required rate of return is 16 percent? A. -$311.02B.$2,168.02C. $4,650.11D. $9,188.98E. $21,168.02AACSB: AnalyticBloom's: ApplicationDifficulty: BasicLearning Objective: 9-1Section: 9.1Topic: Net present value9-78

Chapter 09 - Net Present Value and Other Investment Criteria

#### You've reached the end of your free preview.

Want to read all 127 pages?

- Fall '08
- KOCH
- Net Present Value