Reference no: EM131925296
1) Including real options in a capital budgeting analysis can raise, but not lower, a project's expected NPV as found in a traditional analysis. This is true because, by definition, an option can be exercised or not, and if the option has a negative value, it will be rejected. True or false?
2) A premium on the forward rate is the situation when the spot rate is greater than the forward rate. True or false?
3) Post-audits point out errors in forecasts, and they identify why the errors occurred. This information should help firms obtain better forecasts in the future and improve their capital budgeting process. True or false?
4) Political risk can take on many forms. The important reality for a multinational enterprise is that political risk not only exists but also varies from country to country, and it must be addressed explicitly in any financial analysis. True or false?
5) If the IRS shortened the depreciable lives of the assets, thus increasing their depreciation rates, which of the following statements reflects what would happen to the calculated NPV? a. The calculated NPV would increase. b. The calculated NPV would decrease. c. The calculated NPV would not change.
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Define payback period-net present value-profitability index
: Define payback period, net present value (NPV), profitability index, and modified payback period accompanied by equations for better clarity.
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What price would you expect to pay for the stock
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Breakeven point-long dash-changing ?costs-revenues
: How many books must JWG sell this year to achieve the breakeven point for the stated operating? costs, if all figures remain the same as for last? year?
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Find the present value of the annual cash flow
: An investment, which is worth 35,500 dollars and has an expected return of 10.84 percent, is expected to pay fixed annual cash flows for a given amount.
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Expected npv as found in traditional analysis
: Including real options in a capital budgeting analysis can raise, but not lower, a project's expected NPV as found in a traditional analysis.
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What is the present value of the annual cash flow
: An investment, which is worth 20,500 dollars and has an expected return of 9.83 percent, is expected to pay fixed annual cash flows for a given amount of time.
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Which method is better for capital investment decision
: Based on the internal rate of return, should the company invest in the equipment? Which method is better for this capital investment decision?
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What is total debt ratio
: A firm has a long-term debt-equity ratio of .3. Shareholders’ equity is $1.08 million. What is the total debt ratio?
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Net present value and present value index of the investment
: Determine net present value and present value index of investment, assuming that Harper uses straight-line depreciation for financial and income tax reporting.
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