University of Louisiana, Lafayette - FNAN 522 Module 4 Homework. Latest 2022
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Course
FNAN 522
Institution
University Of Louisiana, Lafayette
University of Louisiana, Lafayette - FNAN 522 Module 4 Homework.Started on Monday, 18 November 2019, 7:27 AM State Finished Completed on Monday, 18 Novem ber 2019, 5:01 PM Time taken 9 hours 34 mins Grade 20.00 out of 20.00 (100%) A company is analyzing a variety of potential investments using diff...
a company is analyzing a variety of potential investments using different capital budge
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University of Louisiana, Lafayette
FNAN 522
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FNAN522-020_860-202020
Started on Monday, 18 November 2019, 7:27 AM
State Finished
Completed on Monday, 18 November 2019, 5:01 PM
Time taken 9 hours 34 mins
Grade 20.00 out of 20.00 (100%)
Question 1 A company is analyzing a variety of potential
Correct investments using different capital budgeting
methods. Which of the following represents the
Mark 1.00 out of
most profitable choice based on the information
1.00
provided?
Select one:
a. The company picks a project with an NPV
of $250,000 over one with an NPV of
$300,000.
b. The company picks a project with a 5 year
payback period over one with a 3 year
payback period.
c. The company picks a project with
profitability index of 1.25 over a project with a
PI of -.25.
d. The company picks a project with an
accounting rate of return 5% over one with an
ARR of 3%.
, Question 2 A firm is trying to choose the most profitable
Correct project to invest in. Which of the following should
be used as the company's discount rate?
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1.00
Select one:
a. The projects' average internal rate of
return.
b. The company's profitability index.
c. The company's reinvestment rate or
weighted average cost of capital.
d. The company's weighted average cost of
capital.
Question 3 Calculate the discounted payback period for a
Correct project with a discount rate of 5% the following
cash flows:Year 0: -$2000Year 1: $1000Year 2: -
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$1000Year 3: $1000Year 4: $3000Year 5: $2000
1.00
Select one:
a. 4.44 years.
b. 3.56 years.
c. 3.44 years.
d. 4 years.
Question 4 In which of the following situations would it be
Correct appropriate to use the IRR method to make an
investment decision?
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Select one:
a. All of these answers.
b. To compare two projects that have an equal
initial investment and lifespan.
c. To compare two investments that have
different durations.
d. To assess a project which cash flows
fluctuate between positive and negative.
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