FNAN 522 EXAM QUESTIONS AND ANSWERS GRADED 100% 2023.

FNAN 522 EXAM QUESTIONS AND ANSWERS GRADED 100% 2023. In which of the following situations would it be appropriate to use the IRR method to make an investment decision? 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. The correct answer is: To compare two projects that have an equal initial investment and lifespan. Question 4 Incorrect Mark 0.00 out of 1.00 Question 5 Incorrect Mark 0.00 out of 1.00 Under the internal rate of return rule in capital budgeting, which of the following statements CANNOT be true? Select one: a. The cash inflows can be estimates. b. The internal rate of return can be equal to the cost of capital. c. The initial investment can be the cost from purchasing new equipment. d. The internal rate of return can vary throughout the life of a project. The correct answer is: The internal rate of return can vary throughout the life of a project. You have just been offered a contract worth $5.6 million per year for 3 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 15.3%. You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV? Select one: a. $12.6 million b. $23.4 million c. $16.8 million d. $5.6 million The correct answer is: $12.6 million Question 6 Incorrect Mark 0.00 out of 1.00 Question 7 Correct Mark 1.00 out of 1.00 Which of the following could be a sunk cost? Select one: a. Labor hours spent on planning project. b. All of these answers. c. Equipment purchased to pursue a project. d. A feasibility study that attempted to determine the economic viability of a project. The correct answer is: All of these answers. Which of the following is an example of an opportunity cost? Select one: a. All of these answers. b. If invest in one of two projects, the cost is the lost revenue from the other project. c. If you buy a candy bar instead of a soda, the cost is thirst. d. If you watch a game instead of going for a run, the cost is poorer personal health. The correct answer is: All of these answers. Question 8 Correct Mark 1.00 out of 1.00 Question 9 Incorrect Mark 0.00 out of 1.00 Which of the following is the best reason to use the payback method to evaluate investments? Select one: a. If you use the payback method, you do not need to perform additional analyses. b. The payback method is easy to use and understand for most people, regardless of training. c. The payback method adjusts for the project's riskiness. d. The payback method covers all cash inflows and outflows for the duration of the investment.