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the firm is facing A. a labor union. B. a major investment. C. time or resource constraints. D. the election of a new board of directors.

the firm is facing A. a labor union. B. a major investment. C. time or resource constraints. D. the election of a new board of directors.

Essentials Of Investments
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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1. The Net Present Value decision technique may not be the only pertinent unit of measure if the firm is facing A. a labor union. B. a major investment. C. time or resource constraints. D. the election of a new board of directors. 2. Which rate-based decision statistic measures the rate of return, including the cost of capital for a project? A. Profitability Index, PI B. Net Present Value, NPV C. Internal Rate of Return, IRR D. Modified Internal Rate of Return, MIRR 3. When looking at these types of projects, one must consider any cash flows that arise from installing the new equipment. A. new B. cost-cutting C. incremental D. replacement E. all of the above. 4. Of the capital budgeting techniques discussed, which works equally well with normal and non-normal cash flows and with independent and mutually exclusive project? A. payback period B. net present value C. discounted payback period D. modified internal rate of return 5. The approach to convert an infinite series of asset purchases into a perpetuity is known as the A. Net present value approach B. Net working capital approach C. Equivalent annual cost approach D. Equivalent annual cash flow approach 6. Neither payback period nor discounted payback period techniques for evaluating capital projects accounts for A. risk B. time value of money. C. market rates of return. D. cash flows that occur after payback.
Transcribed Image Text:1. The Net Present Value decision technique may not be the only pertinent unit of measure if the firm is facing A. a labor union. B. a major investment. C. time or resource constraints. D. the election of a new board of directors. 2. Which rate-based decision statistic measures the rate of return, including the cost of capital for a project? A. Profitability Index, PI B. Net Present Value, NPV C. Internal Rate of Return, IRR D. Modified Internal Rate of Return, MIRR 3. When looking at these types of projects, one must consider any cash flows that arise from installing the new equipment. A. new B. cost-cutting C. incremental D. replacement E. all of the above. 4. Of the capital budgeting techniques discussed, which works equally well with normal and non-normal cash flows and with independent and mutually exclusive project? A. payback period B. net present value C. discounted payback period D. modified internal rate of return 5. The approach to convert an infinite series of asset purchases into a perpetuity is known as the A. Net present value approach B. Net working capital approach C. Equivalent annual cost approach D. Equivalent annual cash flow approach 6. Neither payback period nor discounted payback period techniques for evaluating capital projects accounts for A. risk B. time value of money. C. market rates of return. D. cash flows that occur after payback.
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