Investment decision rules adjusts for time value of money

Assignment Help Financial Management
Reference no: EM131317131

1. Which of the following investment decision rules adjusts for the time value of money?

A. Average Accounting Rule (AAR) B. Profitability Index C. Payback Period

2. Camille purchased a bond 5 years ago for $1,050. The bond paid $50 in annual interest and returned the $1,000 principal at the end of the fifth year. Camille used the interest payment to pay for college textbooks.

A) Her internal rate of return was exactly than 5%.

B) Her internal rate of return was greater than 5%.

C) Her internal rate of return was less than 5%.

D) Her internal rate of return cannot be determined.

Reference no: EM131317131

Questions Cloud

Determine the current value of the bond : Ashlor Corporation has a bond issue outstanding with a 7% coupon, semiannual payments, and 4 years remaining until maturity. The par value of the bond is $1,000. Determine the current value of the bond if present market conditions justify a 14% requi..
Statements about the standard deviation : Which of the following statements about the standard deviation are correct? Which one of the following indexes reflects a large sample of small, medium sized and large companies?
Create a report card for a specific coral reef : Create a Report Card for a specific coral reef, indicating the threats, hypothetical or documented causes, and interventions that might be possible
Most assets show slight degree of negative correlation : If the risk-free rate of return is less than the inflation rate, the real rate of return is negative. If the actual rate of return on an investment portfolio is constant from year to year, the standard deviation of that portfolio is zero. Most assets..
Investment decision rules adjusts for time value of money : Which of the following investment decision rules adjusts for the time value of money? Camille purchased a bond 5 years ago for $1,050. The bond paid $50 in annual interest and returned the $1,000 principal at the end of the fifth year. Camille used t..
Narrowed the decision down to two potential targets : TCG plans to acquire a sports media company. TCG has narrowed the decision down to two potential targets. Assuming that the acquisition is a mutually exlusive project, which decision rule enables TCG to rank the companies and choose the best one?
Discuss about evaluation of thematic development : Acts 1:8 serves as the key verse of the book.Jesus' words give an "inspired outline" for Acts, as the witnessing mission is launched in Jerusalem (Acts 1-7), spreads throughout Judea and Samaria (Acts 8-12), and then advances across the Mediterran..
The new app will generate incremental cash flows : Dave is considering investing in a new app for his mobile website. The initial cost is $100,000. However, Dave believes that the new app will generate more page views and thus more advertising revenue. He predicts that the new app will generate incre..
Residual value of firm after period of competitive adventage : Sales growth rates: Base year = 15% with a fade rate of 1% a year for years 1-10: (increasing sales due to sustained competitive advantage and a differentiated product)[source: Strategic Plan]. Fade rate is the rate of decline per year (each year) fr..

Reviews

Write a Review

 

Financial Management Questions & Answers

  What is your debt service for the first two years

You have purchased a multi tenant office building for $15,000,000. Your acquisition costs associated with this purchase are $25,000. The estimated land value is $3,000,000, of which you estimate the depreciable land portion at $1,000,000. What is you..

  Does any currency exchange rate risk exist

Does any currency exchange rate risk exist? Why? What is a tariff? How is it implemented and collected? Also respond to the vice president of business development's request for the following: the total amount of money NSI would receive from each scen..

  Issued stock dividends during the current period

For this discussion, assume the role of an investor. How would you know whether the company you are considering to invest in has repurchased any of its own stock and/or issued stock dividends during the current period? Why is this important, and woul..

  Cost of trade credit and bank loan

Lamar Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 30; and it currently pays after 5 days and takes discounts. Lamar plans to expand, which will require additional financing. Assume 365 days in year for your calculation..

  Are such amounts excessive

Critics have charged that compensation to top managers in the United States is simply too high and should be cut back. For example, focusing on large corporations, Robert Kotick, CEO of Activision Blizzard, earned about $64.9 million in 2013.

  How would the payment differ if you paid interest only

You wish to buy a $26,500 car. The dealer offers you a 4-year loan with a 10 percent APR. What are the monthly payments? Payment $ per month How would the payment differ if you paid interest only?

  About the present value

What is the present value of a $1,000 annuity for 10 years, with the first payment occurring at the end of year 10 (that is, ten $1,000 payments occurring at the end of year 10 through 19), given a discount rate of 10 percent?

  Effective annual return of eight percent on this investment

Peter Lynchpin wants to sell you an investment contract that pays equal $12,100 amounts at the end of each year for the next 21 years. If you require an effective annual return of 8 percent on this investment, how much will you pay for the contract t..

  After successfully completing corporate finance class

After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only individual voting for you. If Schenkel has 410,000 shares..

  If people base their forecasts on rational expectations

If people base their forecasts on rational expectations, their forecast is the:

  Suppose your required return on project-pretax cost savings

Your firm is contemplating the purchase of a new $642,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. Suppose your required return on the project is 8 percent and your pretax cost sa..

  Does the financial manager have a greater responsibility

Does the financial manager have a greater responsibility or a lesser responsibility for maintaining ethical corporate governance? Why or why not? What is or will be your approach to ethical corporate governance now or in the future?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd