Solution-What steps involved in process for capital

What steps involved in process for capital decision-making

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Reference no: EM132529427

Question 1: Preference decisions compare potential projects that meet screening decision criteria and will be ranked in their preference order to differentiate between alternatives with respect to all of the following characteristics except________________________________________.

A. importance

B. desirability

C. feasibility

D. political prominence

Question 2: You are explaining time value of money factors to your friend. Which factor would you explain as being larger?

A. The future value of $1 for 12 periods at 6% is larger

B. there is not enough information given to answer this question

C. neither one is larger because they are equal

D. the present value of $1 for 12 periods at 6% is larger

Question 3: You want to invest $8,000 at an annual interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years?

A. present value of one dollar (1$)

B. future value of one dollar ($1)

C. future value of an ordinary annuity

D. present value of an ordinary annuity

Question 4: Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each year for the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan?

A. $23,500

B. $14,000

C. $80,000

D. $94,000

Question 5: The process of reinvesting interest earned to generate additional earnings over time is ________________________________.

A. discounting

B. compounding

C. annuity

D. lump-sum

Question 6: Which of the following does not assign a value to a business opportunity using time-value measurement tools?

A. discounted cash flow model

B. internal rate of return (IRR) method

C. payback period method

D. net present value (NPV)

Question 7: This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero.

A. new present value (NPV)

B. future value method

C. discounted cash flow method

D. internal rate of return (IRR) method

Question 8: When using the NVP method for a particular investment decision, if the present value of all cash inflows is greater than the present value of all cash outflows, then _______________________________.

A. the investment provides an actual rate of return equal to the discount rate

B. the investment provides an actual rate of return greater than the discount rate

C. the discount rate used was too high

D. the discount rate is too low

Question 9: What are the steps involved in the process for capital decision-making?

Reference no: EM132529427

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What steps involved in process for capital decision-making

Reference no: EM132529427

Reference no: EM132529427

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