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MBA FINANCE MIDTERM EXAM | REAL EXAM
QUESTIONS & VERIFIED ANSWERS | A+ GRADED |
GUARANTEED PASS | UPDATED 2025–2026
The definition of compound interest -
......ANSWERS.....- interest earned on initial principle
and all of the accumulated interest from previous
periods (interest on interest) and it grows faster
than simple interest
The calculation of a present value from a given
future value - ......ANSWERS.....= FV * (1/(1+r)^n)
FV - ......ANSWERS.....= PV (1+r)^t
The definition of net present value -
......ANSWERS.....- Difference of present value of
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future cash net inflows and initial cash outflow and
is utilized to analyze the profitability of a project
- Key to success: using proper discount (interest)
rate and solid estimation of future cash flows
(revenue and costs)
The definition of internal rate of return -
......ANSWERS.....- Rate of return on cash net
inflows, i.e., discount (interest) rate that makes
NPV=0, also known as Economic Rate of Return,
rate of growth a project is expected to generate
The definition of profitability index -
......ANSWERS.....- Ratio of the present value of
future cash net inflows to initial cash outflow,
quantifies value created for each investment unit,
any value lower than 1.0 indicates that PV is less
than the initial investment
MBA FINANCE MIDTERM EXAM | REAL EXAM
QUESTIONS & VERIFIED ANSWERS | A+ GRADED |
GUARANTEED PASS | UPDATED 2025–2026
The definition of compound interest -
......ANSWERS.....- interest earned on initial principle
and all of the accumulated interest from previous
periods (interest on interest) and it grows faster
than simple interest
The calculation of a present value from a given
future value - ......ANSWERS.....= FV * (1/(1+r)^n)
FV - ......ANSWERS.....= PV (1+r)^t
The definition of net present value -
......ANSWERS.....- Difference of present value of
, 2|Page
future cash net inflows and initial cash outflow and
is utilized to analyze the profitability of a project
- Key to success: using proper discount (interest)
rate and solid estimation of future cash flows
(revenue and costs)
The definition of internal rate of return -
......ANSWERS.....- Rate of return on cash net
inflows, i.e., discount (interest) rate that makes
NPV=0, also known as Economic Rate of Return,
rate of growth a project is expected to generate
The definition of profitability index -
......ANSWERS.....- Ratio of the present value of
future cash net inflows to initial cash outflow,
quantifies value created for each investment unit,
any value lower than 1.0 indicates that PV is less
than the initial investment
