Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- What happens when "pet" projects do not have the requisite NPV or IRR? Do pet projects seem to be approved over other more viable projects? Why does this happen?arrow_forwardWhich of the following were listed as potential Problems or Issues associated with Using a Rate of Return Approach to justifying single or multiple Mutually Exclusive projects? Note: This is a Multiple Answer question. Please select all of the following options you think are correct? O The ROR calculations are typically more complex than the PW, AW, or FW methods and frequently require the use of trial and error techniques. O You cannot rely on the best Mutually Exclusive project to have the highest ROR. O An incremental approach is required to reliably determine the best project when comparing multiple Mutually Exclusive projects with the ROR approach. O This method assumes that any net positive cash flows are reinvested at the ROR rate. If the ROR rate is substantially larger than MARR, this might not be a realistic assumption. OFor any sequence of Net Cash Flows with more than one sign chance over the life of the project there may be more than one ROR value that satisfies the Rate…arrow_forward29....When using the NPV method the decision making rationale includes the following (select all that apply): a.If projects are mutually exclusive, accept the project with the highest positive NPV. b.If projects are independent, accept if the project NPV<0. c.If projects are independent, accept if the project NPV>0 d.If the projects are mutually exclusive, accept the project with lowest NPV.arrow_forward
- What does Highest and Best Use consist of? Group of answer choices: (1) legally permissible (2) physically possible (3) return on investment (4) maximally productive (1) legally permissible (2) physically possible (3) financially feasible (4) maximally productive (1) legally permissible (2) physically pleasing (3) financially feasible (4) maximally productive (1) legally permissible (2) physically possible (3) financially feasible (4) maximum income productionarrow_forwardDiscuss what reason to decide whether to accept or reject a project. Your should refer to all four investment appraisal methods.arrow_forwardDescribe one advantage and one disadvantage of the NPV methodology of evaluating proposed projectsarrow_forward
- How many IRRs could be estimated for each project below: Project A has ________ (1, 2, 3, or 4) IRR(s). Project B has _________(1,2, 3, or 4) IRR(s). Project C has _________(1,2, 3, or 4) IRR(s). Project D has _________(1,2, 3, or 4) IRR(s)arrow_forwardWhich capital budgeting technique step in the decision process is not used to evaluate a group of independent projects? Multiple Choice Compute the statistic. Have a runoff between the mutually exclusive projects choosing the one with the best statistic. Compare the computed statistic with the benchmark to decide to accept or reject the project. All of these choices are used.arrow_forward
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