The Modified Internal Rate of Return (MIRR) is based on : Reinvestment rate, financing rate, and the number of periods Only the reinvestment rate of the project's cash flows Neither of the aforementioned variables Only the financing rate of the project's cash flows

The payback period is a non - discounted cash flow technique that measures: a. The time required to recover the initial investment b. The profitability of the project c. The net present value of the project d. The internal rate of return of the project

The method that measures a projects return based on present values is the: Internal Rate of Return Discounted Payback Period Modified Internal Rate of Return None of the Above

What is the procedure of developing Project Cash Flow Statements?

Define “the stand-alone principle” applying in evaluating projects and discuss the types of cashflows in project evolution.

In the estimation of incremental cash flows for a new project, several costs and issues are considered.   In reference to the lecture materials for cash flow estimation, list the seven important issues to be kept track of in estimating incremental cash flows for expansion, replacement, or new capital projects. [No explanation is required for this part.]

Explain the uses, limitations and merits of the Payback Period compared to Net Present Value in investment appraisal.

A characteristic of the payback method is that it: (See your Chapter 25 notes, page 9) Uses accrual accounting inflows in the numerator of the calculation Uses the estimated expected useful life of the asset in the denominator of the calculation Incorporates cash flows received after the payback period has been reached Is based on accounting income Incorporates the time value of money Ignores total project profitability

Define each of the following terms:b. Incremental cash flow; sunk cost; opportunity cost; externality; cannibalization; expansion project; replacement project

The average accounting rate of return (AAR): Select one: A. is the best method of financially analysing mutually exclusive projects. B. is similar to the return on assets ratio. C. measures net income as a percentage of the sales generated by a project. D. considers the time value of money. E. is the primary methodology used in analyzing independent projects.