Which of the following statements is CORRECT?

Answer
• Question 2
4 out of 4 points

Which of the following statements is CORRECT?
• Question 3
4 out of 4 points

Which of the following statements is CORRECT?
Answer
• Question 4
4 out of 4 points

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

• Question 5
4 out of 4 points

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

• Question 6
4 out of 4 points

Which of the following statements is CORRECT?

• Question 7
0 out of 4 points

The WACC for two mutually exclusive projects that are being considered is 12%. Project K has an IRR of 20% while Project R’s IRR is 15%. The projects have the same NPV at the 12% current WACC. Interest rates are currently high. However, you believe that money costs and thus your WACC will soon decline. You also think that the projects will not be funded until the WACC has decreased, and their cash flows will not be affected by the change in economic conditions. Under these conditions, which of the following statements is CORRECT?

• Question 8
4 out of 4 points

Which of the following statements is NOT a disadvantage of the regular payback method?

• Question 9
4 out of 4 points

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

• Question 10
4 out of 4 points

Which of the following statements is CORRECT?

• Question 11
4 out of 4 points

Projects S and L are both normal projects with an initial cost of $10,000, followed by a series of positive cash inflows. Project S’s undiscounted net cash flows total $20,000, while L’s total undiscounted flows are $30,000. At a WACC of 10%, the two projects have identical NPVs. Which project’s NPV is more sensitive to changes in the WACC?

• Question 12
4 out of 4 points

Projects C and D both have normal cash flows and are mutually exclusive. Project C has a higher NPV if the WACC is less than 12%, whereas Project D has a higher NPV if the WACC exceeds 12%. Which of the following statements is CORRECT?

• Question 13
4 out of 4 points

Which of the following statements is CORRECT?

• Question 14
4 out of 4 points

Which of the following statements is CORRECT?

• Question 15
4 out of 4 points

Which of the following statements is CORRECT?

• Question 16
0 out of 4 points

Which of the following procedures does the text say is used most frequently by businesses when they do capital budgeting analyses?
Answer

• Question 17
4 out of 4 points

A firm is considering a new project whose risk is greater than the risk of the firm’s average project, based on all methods for assessing risk. In evaluating this project, it would be reasonable for management to do which of the following?

• Question 18
4 out of 4 points

Which of the following statements is CORRECT?
Answer

• Question 19
0 out of 4 points

Which of the following is NOT a relevant cash flow and thus should not be reflected in the analysis of a capital budgeting project?

• Question 20
0 out of 4 points

Puckett Inc. risk-adjusts its WACC to account for project risk. It uses a WACC of 8% for below-average risk projects, 10% for average-risk projects, and 12% for above-average risk projects. Which of the following independent projects should Puckett accept, assuming that the company uses the NPV method when choosing projects?

• Question 21
4 out of 4 points

While developing a new product line, Cook Company spent $3 million two years ago to build a plant for a new product. It then decided not to go forward with the project, so the building is available for sale or for a new product. Cook owns the building free and clear?there is no mortgage on it. Which of the following statements is CORRECT?
Answer

• Question 22
0 out of 4 points

Which of the following procedures best accounts for the relative risk of a proposed project?
Answer

• Question 23
0 out of 4 points

Which of the following should be considered when a company estimates the cash flows used to analyze a proposed project?

• Question 24
4 out of 4 points

The CFO of Cicero Industries plans to calculate a new project’s NPV by estimating the relevant cash flows for each year of the project’s life (i.e., the initial investment cost, the annual operating cash flows, and the terminal cash flow), then discounting those cash flows at the company’s overall WACC. Which one of the following factors should the CFO be sure to INCLUDE in the cash flows when estimating the relevant cash flows?

• Question 25
4 out of 4 points

Which of the following statements is CORRECT?

• Question 26
4 out of 4 points

To increase productive capacity, a company is considering a proposed new plant. Which of the following statements is CORRECT?

• Question 27
0 out of 4 points

Which of the following statements is CORRECT?

• Question 28
0 out of 4 points

Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a new product?

• Question 29
0 out of 4 points

Which of the following statements is CORRECT?
Answer

• Question 30
4 out of 4 points

Which of the following statements is CORRECT?