As the capital budgeting director for Chapel Hill Coffins Inc., you are evaluating construction of a new plant. The plant has a net cost of $5 million in Year 0 (today), and it will provide net cash inflows of $1 million at the end of Year 1, $1.5 million at the end of Year 2, […]
Date: September 19th, 2020
Given the following net cash flows, determine the IRR of the project: (to the nearest whole percent) Time Net Cash Flow 0 $1,520 1 -$1,000 2 -$1,500 3 $500 A) 36% B) 32% C) 28% D) 24% E) 20% ANSWER D
Date: September 19th, 2020
At an interest rate of 10% it will take approximately how many years to double your investment? A) Less than five years B) Between 7 and 8 years C) Between 9 and 10 years D) More than 10 years ANSWER B
Date: September 19th, 2020
In the economic field of agency theory, which one of the following is viewed as an agent with the principals who are most importantly the firm’s shareholders? A) suppliers B) employees C) managers D) attorneys ANSWER Answer: C
Date: September 19th, 2020
An annuity is A) a sum received in the future. B) a sum earned in the future but received now. C) a series of unequal payments. D) a series of equal payments. ANSWER D
Date: September 19th, 2020
State-owned investment funds that manage global portfolios of investment assets are known as A) hedge funds. B) sovereign wealth funds. C) city-state pensions. D) multinational mutual funds. ANSWER Answer: B
Date: September 19th, 2020
A firm is evaluating two independent projects utilizing the internal rate of return technique. Project X has an initial investment of $80,000 and cash inflows at the end of each of the next five years of $25,000. Project Z has a initial investment of $120,000 and cash inflows at the end of each of the […]
Date: September 19th, 2020
What economic field of study explores the problems associated with a firm that arise from a separation of ownership and control and devises ways to resolve them? A) futures and options B) agency theory C) foreign direct investment D) franchising ANSWER Answer: B
Date: September 19th, 2020
Consider two firms that are identical in every way except that one has $15,000 of debt and 500 shares of stock outstanding, while the other is all-equity and has 650 shares of stock outstanding. Assume that the debt is a perpetuity with annual coupons at the rate of 6%. What is each firms’ earnings per […]
Date: September 19th, 2020
If you wish to double your money in 6 years, you must earn an interest rate of about A) 8%. B) 24%. C) 12%. D) 36%. ANSWER C
Date: September 19th, 2020
