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• Question 15 A client wants to know how many years it will take
before the accumulated cash flows from an investment exceed the
initial investment, without taking the time value of money into
account. Which of the following financial models should be used?
• Question 16 Which of the following limitations is common to the
calculations of payback period, discounted cash flow, internal
rate of return, and net present value?
• Question 17 A project has an initial outlay of $1,000. The
projected cash inflows are
• Question 18 Harvey Co. is evaluating a capital investment
proposal for a new machine. The investment proposal shows the
following information:
• Question 19 How are the following used in the calculation of the
net present value of a proposed project? Ignore income tax
considerations.
• Question 20 In considering the payback period for three
projects, Fly Corp. gathered the following data about cash flows:
• Question 21 The discount rate (hurdle rate of return) must be
determined in advance for the
• Question 22 Which of the following statements is correct
regarding financial decision making?
• Question 23 Which of the following is necessary in order to
calculate the payback period for a project?
• Question 24 An efficient portfolio is one that
• Question 25 Which of the following scenarios would encourage
a company to use short-term loans to retire its ten-year bonds
that have five years until maturity?
• Question 26 What is the formula for calculating the
profitability index of a project?
• Question 27 The profitability index is a variation on which of
the following capital budgeting models?
• Question 28 Assume that management of Trayco has generated
the following data about an investment project that has a five-
year life:
• Question 29 A company purchases an item for $43,000. The
salvage value of the item is $3,000. The cost of capital is 8%.
Pertinent information related to this purchase is as follows: