A project is economically feasible if: O a. ts future worth is less than zero O b. its annual worth is greater than 0 O .ts internal rate of return is equal to its external rate of return Od Its external rate of return is less than the minimum attractive rate of return O e Its external rate of return is greater than 0

A project is economically feasible if: O a. ts future worth is less than zero O b. its annual worth is greater than 0 O .ts internal rate of return is equal to its external rate of return Od Its external rate of return is less than the minimum attractive rate of return O e Its external rate of return is greater than 0

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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What is the risk free rate implied by these assets?
3. The net present value (NPV) of a firm will be negative if it is expected to have ROC < WACC in perpetuity. (All else equal.) True or false
Which of the following statements is most FALSE? A. If a project with normal cash flows has a positive NPV, it will definitely have an MIRR greater than the cost of capital. B. If a project with normal cash flows has an IRR that is greater than the cost of capital, then taking on that project would decrease the value of the firm. C. If a project has normal cash flows, then the MIRR has to be between k and IRR if the project has positive interim cash flows (cash flows between t=0 and the end of the project). D. If a project with normal cash flows does not have any interim cash flows, the project's IRR will equal the project's MIRR. E. Multiple IRRS can exist for a project if the project has nonnormal cash flows. OA OB OC
The internal rate of return (IRR) is the: Multiple Choice discount rate that results in a zero net present value for the project. discount rate that causes a project's aftertax income to equal zero.
If for a certain project the income of the development is received later than the costs are incurred, a/an in the effective rate of interest will lead the discounted payback period to Select one: a. Decrease, increase b. Increase, increase c. No mutual relationship between the two. d. Decrease/lncrease, stay constant
A project's internal rate of return (IRR) is the discount rate YTM on a bond. The equation for calculating the IRR is: timing Project A Project B 0 1 2 CFt is the expected cash flow in Period t and cash outflows are treated as negative cash flows. There must be a change in cash flow signs to calculate the IRR. The IRR equation is simply the NPV equation solved for the particular discount rate that causes NPV to equal zero 320 255 The IRR calculation assumes that cash flows are reinvested at the IRR If the IRR is greater ✔than the project's risk-adjusted cost of capital, then the project should be accepted; however, if the IRR is less than the project's risk-adjusted cost of capital, then the project should be rejected ✓✓✓. Because of the IRR reinvestment rate assumption, when mutually exclusive projects are evaluated the IRR approach can lead to conflicting results from the NPV method. Two basic conditions can lead to conflicts between NPV and IRR: ✔ differences (earlier cash flows in…
If the net present value of a project is zero based on a discount rate of 16%, then the internal rate of return is: Select one: O a. equal to 16% O b. greater than 16% O c. less than 16% O d. cannot be determined from this data
Which investment criteria answers the question: "How quickly do we recover our investment, in nominal dollars?" A) net present value B) internal rate of return C) profitability index D) payback period
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 payback
PLEASE ANSWER ASAP.....
9
The required span of time within which the investment made for the project will be recovered by the net returns of the project is known as Select one: a. None of the option b. Payback period c. Period of return d. Span of return e. No Present Value

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