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41.
Roger's Meat Market is considering two independent projects. The
profitability index decision rule indicates that both projects should be
accepted. This result most likely does which one of the following?
42.
Which one of the following methods of analysis provides the best
information on the cost-benefit aspects of a project?
43.
When the present value of the cash inflows exceeds the initial cost of a
project, then the project should be:
44.
Which one of the following is the best example of two mutually exclusive
projects?
45.
Southern Chicken is considering two projects. Project A consists of creating
an outdoor eating area on the unused portion of the restaurant's property.
Project B would use that outdoor space for creating a drive-thru service
window. When trying to decide which project to accept, the firm should rely
most heavily on which one of the following analytical methods?
46.
Mutually exclusive projects are best defined as competing projects which:
47.
The final decision on which one of two mutually exclusive projects to accept
ultimately depends upon which one of the following?
48.
Isaac has analyzed two mutually exclusive projects of similar size and has
compiled the following information based on his analysis. Both projects
have 3- year lives.
Isaac has been asked for his best recommendation given this information.
His recommendation should be to accept:
49.
Which one of the following statements would generally be considered as
accurate given independent projects with conventional cash flows?
50.
In actual practice, managers frequently use the:
I. average accounting return method because the information is so readily
available.
II. internal rate of return because the results are easy to communicate and
understand.
III. discounted payback because of its simplicity.
IV. net present value because it is considered by many to be the best
method of analysis.
51.
Kristi wants to start training her most junior assistant, Amy, in the art of
project analysis. Amy has just started college and has no experience or
background in business finance. To get her started, Kristi is going to assign
the responsibility for all projects that have initial costs less than $1,000 to
Amy to analyze. Which method is Kristi most apt to ask Amy to use in
making her initial decisions?
52.
Which two methods of project analysis were the most widely used by CEO's
as of 1999?
53.
Which two methods of project analysis are the most biased towards short-
term projects?
54.
Western Beef Exporters is considering a project that has an NPV of $32,600,
an IRR of 15.1 percent, and a payback period of 3.2 years. The required
return is 14.5 percent and the required payback period is 3.0 years. Which
one of the following statements correctly applies to this project?
55.
You are considering a project with conventional cash flows and the
following characteristics:
Which of the following statements is correct given this information?
I. The discount rate used in computing the net present value was less than
11.63 percent.
II. The discounted payback period must be more than 2.98 years.
III. The discount rate used in the computation of the profitability ratio was
11.63 percent.
IV. This project should be accepted as the internal rate of return exceeds
the required return.
56.
Which of the following are definite indicators of an accept decision for an
independent project with conventional cash flows?
I. positive net present value
II. profitability index greater than zero
III. internal rate of return greater than the required rate
IV. positive internal rate of return
57.
What is the net present value of a project with the following cash flows if
the required rate of return is 9 percent?
58.
What is the net present value of a project that has an initial cash outflow of
$34,900 and the following cash inflows? The required return is 15.35
percent.
59.
A project will produce cash inflows of $2,800 a year for 4 years with a final
cash inflow of $5,700 in year 5. The project's initial cost is $9,500. What is
the net present value of this project if the required rate of return is 16
percent?
60.
You are considering the following two mutually exclusive projects. The
required rate of return is 14.6 percent for project A and 13.8 percent for
project B. Which project should you accept and why?
