If the internal rate of return is greater than the Blank______, the project should be accepted. Multiple choice question. inflation rate risk-free rate payback period required return
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- n 0 1 2 3 4 5 6 7 8 9 10 A -$250 $60 $970 B -$200 $90 $90 $60 $60 Net Cashflow с -$70 $20 $10 $5 -$50 $60 $50 $40 $30 $20 $10 D -$300 $270 $250 -$129 -$20 $120 $40 E -$90 -$100 -$50 $0 $150 $150 $100 $100What is the Modified Internal Rate of Return (MIRR) Select one: The opposite of NPV A reinvestment rate to account for positive cash flows reinvested into a project An approach to discounting The finance rate of a projectThe method that measures a projects return based on present values is the: Internal Rate of Return Discounted Payback Period Modified Internal Rate of Return None of the Above
- Which of the following is true? Discounted Payback Period is by definition longer than the Non-Discounted Payback Period as long as the discount rate is greater than zero. A project has a positive NPV if its Profitability Index is less than 1. a and b None of the aboveA good approximation to use for the return on an average-risk project would be today’s interest rate on Treasury bills plus a risk premium of ____ percentage points. 1.8 6.5 7.0 8.0 11.7 Give typing answer with explanation and conclusionTo estimate project value, FCF should be computed at real values, i.e., stripped of inflation nominal values, i.e., inflation rate included either nominal or real values--it will make no difference
- Explain how inflation impacts capital budgeting analysis. Why do we care? How is NPV impacted if you neglect to adjust for inflation in the cash flows when you use a discount rate based upon market (nominal) rates. Does it make the project look better or worse? Explain fully.Which of the following is not a capital budgeting technique? Select one: a. Net present value b. Discounted Payback period c. Payback Period d. Profitability index e. Ratio Analysis Which capital budgeting projects are preferred? Select one: a. Lower payback period b. None of the option c. Higher payback period d. Lower cash inflow projects e. Average payback periodWhich of these will increase the present value of an amount to be received sometime in the future? Group of answer choices Increase in the discount rate. Increase in the time until the amount is received. Decrease in the interest rate Decrease in the future value
- 1. Which of the following is not true? Group of answer choices The method in which we calculate a project’s Internal Rate of Return (IRR) is called the Discounted Cash Flow approach. The Payback period can be calculated using the discounted (present) values of future cash inflows. The Payback period calculated using this method is what's called the Discounted Payback Period. The Net Present Value is calculated using the present value of the investments and future cash inflows. None of the above (all of the above are correct)How does the size of the initial investment affect the internal rate of return on the net present value models?Total project value ($) Debt Option Loan-to-value Rate (%) Interest only period (years) Amortization (years) $35,000,000.00 A 65% 3.25% 3 20 B 70% 3.25% 3 30 C 70% 3.00% 0 30 D 50% 4.25% 0 30
