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Corporate Finance MCs Questions and Correct Answers & Latest Updated $14.79   Add to cart

Exam (elaborations)

Corporate Finance MCs Questions and Correct Answers & Latest Updated

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  • Course
  • Corporate Finance
  • Institution
  • Corporate Finance

Present Value is defined as: A. Future cash flows discounted to the present at an appropriate discount rate B. Inverse of future cash flows C. Present cash flow compounded into the future D. None of the above o :## A The rate of return is also called: I) discount rate; II) hurdle rate; ...

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  • August 25, 2024
  • 148
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • Corporate Finance
  • Corporate Finance
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1|Page: 2024/2025 Grade A+




Corporate Finance MCs Questions and Correct
Answers & Latest Updated
Present Value is defined as:




A. Future cash flows discounted to the present at an appropriate discount rate

B. Inverse of future cash flows

C. Present cash flow compounded into the future

D. None of the above


o :## A



The rate of return is also called:




I) discount rate;

II) hurdle rate;

III) opportunity cost of

capital




A. I only

B. I and II only

C. I, II, and III



Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update

,2|Page: 2024/2025 Grade A+


D. None of the given ones


o :## C



The present value formula for one period cash flow is:




A. PV = C1(1 + r)

B. PV = C1/(1 + r)

C. PV = C1/r

D. None of the above


o :## B



The net present value formula for one period is:




I) NPV = C0 + [C1/(1 + r)];

II) NPV = PV required investment; III) NPV = C0/C1

A. I only

B. I and II only

C. III only

D. None of the above


o :## B



The following statements regarding the NPV rule and the rate of return rule are true


Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update

,3|Page: 2024/2025 Grade A+


except:




A. Accept a project if its NPV > 0

B. Reject a project if the NPV < 0

C. Accept a project if its rate of return > 0

D. Accept a project if its rate of return > opportunity cost of capital


o :## C



According to the net present value rule, an investment in a project should be made if the:




A. Net present value is greater than the cost of investment

B. Net present value is greater than the present value of cash flows

C. Net present value is positive

D. Net present value is negative


o :## C



Which of the following statements regarding the net present value rule and the rate of

return rule is not true?




A. Accept a project if NPV > cost of investment

B. Accept a project if NPV is positive



Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update

, 4|Page: 2024/2025 Grade A+


C. Accept a project if return on investment exceeds the rate of return on an equivalent

investment in the financial market

D. Reject a project if NPV is negative


o :## A



The opportunity cost of capital for a risky project is




A. The expected rate of return on a government security having the same maturity as the

project

B. The expected rate of return on a well-diversified portfolio of common stocks

C. The expected rate of return on a portfolio of securities of similar risks as the project

D. None of the above


o :## C



A perpetuity is defined as:




A. Equal cash flows at equal intervals of time for a specific number of periods

B. Equal cash flows at equal intervals of time forever

C. Unequal cash flows at equal intervals of time forever

D. None of the above


o :## B



Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update

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