FNAN 522 FINAL EXAM - QUESTIONS AND ANSWERS GRADED 100% 2023

FNAN 522 FINAL EXAM - QUESTIONS AND ANSWERS GRADED 100% 2023. Which of the following is a correct definition of a capital budgeting method? a. Equivalent annuity method essentially value projects as if they were risky bonds. b. Real option analysis is the ratio of payoff to investment of a proposed project. c. The internal rate of return is the discount rate that gives a net present value of zero. d. The profitability index is the time required for an investment to repay the original investment. Which of the following is a way cash flow factors can be used to improve a business? a. It can be used to determine problems with a business's liquidity. b. It can be used to .determine a project's rate of return or value c. It can be used to evaluate the ""quality"" of income generated by accrual accounting. d. All of these answers. Which of the following is an element needed to calculate an asset's depreciation? a. All of these answers. b. A method of apportioning the cost of the asset. c. The estimated useful life of the asset. d. The cost of the asset minus the asset's salvage value. You have an opportunity to invest $48,900 now in return for $61,200 in one year. If your cost of capital is 8.6%, what is the NPV of thisinvestment? a. $6,231.53 b. $12,300 c. $8,856.92 d. $7,453.59 You have an opportunity to invest $115,000 now in return for $81,200 in one year and $43,200 in two years. If your cost of capital is 9.6%, what is the NPV of this investment? a. -$9,400 b. $4,948.85 c. -$4,948.85 d. $9,400 You run a construction firm. You have just won a contract to build a government office building. Building it will require an investment of $10.6 million today and $5.8 million in one year. The government will pay you $22.2 million in one year upon the building's completion. Suppose the interest rate is 11.3%. What is the NPV of this opportunity? a. $4.14 million b. $5.8 million c. $12.4 million d. $6.3 million Marian Cebrian owns his own business and is considering an investment. If he undertakes the investment, it will pay $6,840 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,710 plus an additional investment at the end of the second year of $8,550. What is the NPV of this opportunity if the interest rate is 2.6% per year? Should Marian take it? a. The NPV is -$9,665. Yes, he should take it. b. The NPV is -$9,665. No, he should not take it. c. The NPV is $9,665. Yes, he should take it. d. The NPV is $9,665. No, he should not take it.