Busn 379 Final Exam

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BUSN 379 Final Exam

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BUSN 379 Final Exam

1. (TCO 4) Which of the following is true regarding the evaluation of projects?

2. (TCO 4) Which of the following investment ranking methods does not consider the time value of money?

3. (TCO 3 and 4) You can ensure that an investment is expected to create value for

4. (TCO 3 and 4) What is the net present value of a project with the following cash flows, if the discount rate is 10 percent?

5. (TCO 4) Howard Company is considering a new project that will require an initial cash investment of $575,000. The project will produce no cash flows for the first three years. The projected cash flows for years 4 through 8 are $73,000, $112,000, $124,000, $136,000, and $145,000, respectively. How long will it take the firm to recover its initial investment in this project?

6. (TCO 4) The postponement of a project until conditions are more favorable:

7. (TCO 4) ___________, occurs when a firm cannot raise financing for a project under any circumstances.

8. (TCO 4) ABC Cameras is considering an investment that will have a cost of $10,000 and the following cash flows: $6,000 in year 1, $4,000 in year 2 and $3,000 in year 3. Assume the cost of capital is 10%. Which of the following is true regarding this investment?

9. (TCO 4) Assume Company X plans to invest $60,000 in industrial equipment. Using Tables 9.6 and 9.7 of your textbook (Page 277), which is the first year depreciation amount under MACRS?

10. (TCO 1 and 4) Assume a corporation has earnings before depreciation, and taxes of $100,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company?

11. (TCO 8) Which of the following statements is true regarding systematic risk?

12. (TCO 8) Which statement is true regarding risk?

13. (TCO 8) The stock of Chocolate Galore is expected to produce the following returns, given the various...