Which one of the following methods predicts the amount by which the market value of a firm will change if a project is accepted? Multiple Choice Internal rate of return Payback Net present value Profitability index Discounted payback
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Which one of the following methods predicts the amount by which the market value of a firm will change if a project is accepted?
-
Internal rate of return -
Payback
-
Net present value -
Profitability index
-
Discounted payback
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- Question 6 Which one of the following methods predicts the amount by which the value of a firm will change if a project is accepted? O Payback O Profitability index O Net present value O Internal rate of return O Discounted paybackThe difference between an investment's market value and its cost is known as its Blank______. Multiple choice question. net present value internal rate of return profitability index payback periodIf you could only have one piece of information to help you understand the discount rate for evaluating a project at hand, which of the following would you prefer? The project has different systematic risk than the firm overall. Group of answer choices How the project's expected cash flows are effected by the overall economy The firm's credit rating The firm's cost of equity The firm's WACC
- Manipulating CAPM Use the basic equation for the capital asset pricing model (CAPM) to work each of the following problems. a. Find the required return for an asset with a beta of 1.48 when the risk-free rate and market return are 8% and 13%, respectively. b. Find the risk-free rate for a firm with a required return of 14.684% and a beta of 1.47 when the market return is 12%. c. Find the market return for an asset with a required return of 12.040% and a beta of 0.95 when the risk-free rate is 5%. d. Find the beta for an asset with a required return of 13.312% when the risk-free rate and market return are 10% and 12.3%, respectively. C a. The required return for an asset with a beta of 1.48 when the risk-free rate and market return are 8% and 13%, respectively, is %. (Round to two decimal places.)Manipulating CAPM Use the basic equation for the capital asset pricing model (CAPM) to work each of the following problems. a. Find the required return for an asset with a beta of 1.59 when the risk-free rate and market return are 7% and 12%, respectively. b. Find the risk-free rate for a firm with a required return of 10.925% and a beta of 0.84 when the market return is 12%. c. Find the market return for an asset with a required return of 9.417% and a beta of 0.31 when the risk-free rate is 8%. d. Find the beta for an asset with a required return of 19.559% when the risk-free rate and market return are 10% and 17.9%, respectively. a. The required return for an asset with a beta of 1.59 when the risk-free rate and market return are 7% and 12%, respectively, is %. (Round to two decimal places.) b. The risk-free rate for a firm with a required return of 10.925% and a beta of 0.84 when the market return is 12% is %. (Round to two decimal places.) c. The market return for an asset with a…Assume a project has a discounted payback that equals the project's life. The project's sales quantity must be at which one of these break-even points? Select one: O a. Accounting O b. Leveraged O c. Marginal O d. Cash Oe. Financial
- While determining the appropriate discount rate, if a firm uses a weighted average cost of capital that is unique to a particular project, it is using the Blank______. Multiple choice question. economic value added method pure play approach subjective approach security market line approachWhile determining the appropriate discount rate, if a firm uses a weighted average cost of capital that is unique to a particular project, it is using the Blank______. Multiple choice question. pure play approach economic value added method subjective approach security market line approachHelp pls
- Which one of the following is an indicator that an investment is acceptable? Check all that apply: Profitability index equal 1.5 Profitability index greater than 0 the required return less than internal rate of return IRR equal to zero Payback period exceeds the required period Profitability index equal 1The net present value (NPV) method estimates how much a potential project will contribute to Business ethics/Shareholders Wealth/Employee Benefits, and it is the best selection criterion. The Smaller/Larger the NPV, the more value the project adds; and added value means a Higher/Larger stock price. In equation form, the NPV is defined as: CFt is the expected net cash flow at Time t, r is the project's risk-adjusted cost of capital, N is its life, and cash outflows are treated as negative cash flows. The NPV calculation assumes that cash inflows can be reinvested at the project's risk-adjusted RD/RS/WACC. When the firm is considering independent projects, if the project's NPV exceeds zero the firm should Accept/Reject the project. When the firm is considering mutually exclusive projects, the firm should accept the project with the Lowest Positive/Lowest Negative/Highest Postive/ Highest Negative NPV.Quantitative Problem: Bellinger Industries is considering two projects for inclusion…The firm should accept a project if: the profitability index is greater than or equal to 1. the payback period is less than the life of the investment. the internal rate of return is positive. the internal rate of return is greater than the accounting rate of return.
