QUICES CAPITULO 7: EL VALOR ACTUAL NETO Y OTROS

CRITERIOS DE INVERSION
Multiple Choice Quiz
(See related pages)

1.
Net present value is the present value of the cash flows subtracted from
the initial investment.

A) True

B) False

2.
Projects with an NPV of zero decrease shareholders' wealth by the cost of
the project.

A) True

B) False

3.
Which of the following statements is correct for a project with a positive
NPV?

A) IRR exceeds the cost of capital.

Accepting the project has an indeterminate effect on
B) shareholders.

C) The discount rate exceeds the cost of capital.

D) The profitability index equals one.

4.
What is the NPV of a project that costs $100,000 and returns $45,000
annually for three years if the opportunity cost of capital is 14%?

A) $3,397.57

B) $4,473.44

C) $16,100.00

D) $35,000.00

5.
The decision rule for net present value is to:

A) accept all projects with cash inflows exceeding initial cost.

reject all projects with rates of return exceeding the
B) opportunity cost of capital.
 C) accept all projects with positive net present values.

D) reject all projects lasting longer than 10 years.

6.
Which of the following changes will increase the NPV of a project?

A) A decrease in the discount rate

B) A decrease in the size of the cash inflows

C) An increase in the initial cost of the project

D) A decrease in the number of cash inflows

7.
What is the maximum that should be invested in a project at time zero if
the inflows are estimated at $40,000 annually for three years, and the
cost of capital is 9%?

A) $101,251.79

B) $109,200.00

C) $117,871.97

D) $130,800.00

8.
What is the approximate IRR for a project that costs $100,000 and
provides cash inflows of $30,000 for 6 years?

A) 19.9%

B) 30.0%

C) 32.3%

D) 80.0%

9.
If the IRR for a project is 15%, then the project's NPV would be:

A) negative at a discount rate of 10%.

B) positive at a discount rate of 20%.

C) negative at a discount rate of 20%.

positive at a discount rate of 15%.
D)