Finance

Washington Industries Inc. is considering a project that has an initia

Washington Industries Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $350,000. The respective future cash inflows from its five-year project for years 1 through 5 are $75,000 each year. Washington expects an additional cash flow of $50,000 in the fifth year. The firm uses the IRR method and […]

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Date: September 19th, 2020

Which of the following assumptions of an ideal (or perfect) capital ma

Which of the following assumptions of an ideal (or perfect) capital market most closely relates to the assumed symmetry of information set shared by all firms and all investors? a. Capital Markets are frictionless b. Homogeneous expectations c. Atomistic competition d. The firm has a fixed investment program e. Once chosen, the firm’s financing is […]

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Date: September 19th, 2020

The Internal Rate of Return (IRR) Model suffers from three problems. W

The Internal Rate of Return (IRR) Model suffers from three problems. Which of the below is NOT one of these problems? A) Comparing mutually exclusive projects B) Cumbersome computations not resolvable by the latest technology C) Incorporates the IRR as the reinvestment rate for the future cash flows D) Multiple IRRs     ANSWER Answer: […]

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Date: September 19th, 2020

Which of the statements below describes the IRR decision criterion? A

Which of the statements below describes the IRR decision criterion? A) The decision criterion is to accept a project if the IRR falls below the desired or required return rate. B) The decision criterion is to reject a project if the IRR exceeds the desired or required return rate. C) The decision criterion is to […]

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Date: September 19th, 2020