Calculating the payback period for a capital project requires knowing which of the following? a. Useful life of the project b. The company's minimum required rate of return c. The project's NPV
Calculating the payback period for a capital project requires knowing which of the following? a. Useful life of the project b. The company's minimum required rate of return c. The project's NPV
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Answer the following:
1. Calculating the payback period for a capital project requires knowing which of the following?
a. Useful life of the project
b. The company's minimum required rate of return
c. The project's NPV
d. The project's annual cash flow
2. The payback criterion for capital investment decisions
a. is conceptually superior to theIRR criterion
a. is conceptually superior to the
b. takes into consideration the time value of money
c. gives priority to rapid recovery of cash
d. emphasizes the most profitable projects
3. What is an investor’s objective in financial statement analysis?
a. To determine if the firm is risky
a. To determine if the firm is risky
b. To determine the stability of earnings.
c. To determine changes necessary to improve future performance
d. To determine whether or not an investment is warranted by estimating a company’s future earnings stream
4. The current ratio is
a. calculated by dividing current liabilities by current assets.
a. calculated by dividing current liabilities by current assets.
b. used to evaluate a company's liquidity and short-term debt paying ability
c. used to evaluate a company's solvency and long-term debt paying ability.
d. calculated by subtracting current liabilities from current assets.
5. Which one of the following is not a characteristic generally evaluated in analyzing financial statements?
a. Liquidity
a. Liquidity
b. Profitability
c. Solvency
d. Marketability
6. What is the most widely used liquidity ratio?
a. Quick ratio
a. Quick ratio
b. Inventory turnover
c. Current ratio
d. Debt ratio
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