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99.If Erika Lee invests $5,000 in a certificate of deposit that pays 5%, compounded annually, what amount will she have in 10 years?a.$8,954b.$8,144c.$12,969d.$7,401w100.The time value of money is taken in account when calculatingI.Mortgage paymentsII.Car paymentsIII. Future values of savings accounts101.(Appendix 12A) The risk premium for a particular project isw102.The most appropriate method(s) for long term decisions103.(CMA) The net present value (NPV) method of investment project analysis assumes that the project’s cash flows are reinvested at thea.Computed internal rate of returnb.Risk-free interest ratec.
Discount rate used in the NPV calculation
Firm’s accounting rate of return
Chapter 12: Strategic Investment Decisions12-19Use the following information for the next 3 questions.Capital Invest, Inc. uses a 12% hurdle rate for all capital expenditures and has done the following analysis for four projects for the upcoming year.Project 1Project 2Project 3Project 4Initial capital outlay$200,000$298,000$248,000$272,000Annual cash inflows: Year 1$65,000$100,000$880,000$95,000Year 270,000135,00095,000125,000Year 380,00090,00090,00090,000Year 440,00065,00080,00060,000Net present value(3,789)4,27614,06414,662Profitability Index0.981.011.061.05Internal rate of return11%13%14%15%w104.(CMA) Which projects should Capital Invest, Inc. undertake during the upcoming year assuming it has no budget restrictions?105.(CMA) Which project(s) should Capital Invest, Inc. undertake during the upcoming year if it has only $600,000 of funds available?106.(CMA) Which project(s) should Capital Invest, Inc. undertake during the upcoming year if it has only $300,000 of capital funds available?Matching1.
The steps in making capital budgeting decisions are listed below. Number the steps in the correct order (1 through 6).____A.Apply one or more quantitative analysis techniques____B.Consider qualitative and quantitative information and make a decision____C.Identify and analyze qualitative factors____D.Identify decision alternatives____E.Identify relevant cash flows____
Perform sensitivity analysis