CFM - Exam 3 – Brune 2025/2026 Exam
Questions and Verified Answers |
Already Graded A+
What is the purpose of the corporation? - 🧠ANSWER ✔✔to make money for the
shareholder
Capital budgeting is the summary of ? (2) - 🧠ANSWER ✔✔planned investments
and long term assets
When is an investment considered long term? - 🧠ANSWER ✔✔longer than 1 year
What are incremental cash flows? - 🧠ANSWER ✔✔the cash flows that occur only
if the project is selected
T/F we will do the investment if the cost is more than the return
T/F we use techniques to analyze expected cash flows
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY 1
STATEMENT. ALL RIGHTS RESERVED
,T/F we only consider incremental cash flows - 🧠ANSWER ✔✔false
true
true
________________ is the time required to recover the initial investment -
🧠ANSWER ✔✔payback
Payback is easy to understand and frequently used, but ? - 🧠ANSWER ✔✔it's not
optimal because it does not consider TVM for cash flows beyond the cutoff
Payback is biased towards (short term/long term)? - 🧠ANSWER ✔✔short term -
emphasized liquidity
When do we accept project based on using payback? - 🧠ANSWER ✔✔if it is less
than the cutoff period
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY 2
STATEMENT. ALL RIGHTS RESERVED
, discounted payback means cash flows are discounted at the ____________.
Meaning it does consider the TVM of money. Therefore, it regards cash flows
_____________ the cutoff period more than regular payback. - 🧠ANSWER
✔✔WACC, beyond (it's more long term than regular payback)
Net present value is the ? - 🧠ANSWER ✔✔PV of expected cash flow of an
investment
What is used as the discount rate for NPV? - 🧠ANSWER ✔✔Wacc
When do we accept a project doing NPV? - 🧠ANSWER ✔✔if the NPV is greater
than zero (if it's a positive number)
the IRR comes out as an (percentage/number)? - 🧠ANSWER ✔✔percentage
IRR is the ? - 🧠ANSWER ✔✔return generated from est cash flows
What is different about MIRR than IRR? ( - 🧠ANSWER ✔✔assumes cash flows
are reinvested at the WACC rather than the IRR
accommodates non-conventional cash flows
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY 3
STATEMENT. ALL RIGHTS RESERVED
Questions and Verified Answers |
Already Graded A+
What is the purpose of the corporation? - 🧠ANSWER ✔✔to make money for the
shareholder
Capital budgeting is the summary of ? (2) - 🧠ANSWER ✔✔planned investments
and long term assets
When is an investment considered long term? - 🧠ANSWER ✔✔longer than 1 year
What are incremental cash flows? - 🧠ANSWER ✔✔the cash flows that occur only
if the project is selected
T/F we will do the investment if the cost is more than the return
T/F we use techniques to analyze expected cash flows
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY 1
STATEMENT. ALL RIGHTS RESERVED
,T/F we only consider incremental cash flows - 🧠ANSWER ✔✔false
true
true
________________ is the time required to recover the initial investment -
🧠ANSWER ✔✔payback
Payback is easy to understand and frequently used, but ? - 🧠ANSWER ✔✔it's not
optimal because it does not consider TVM for cash flows beyond the cutoff
Payback is biased towards (short term/long term)? - 🧠ANSWER ✔✔short term -
emphasized liquidity
When do we accept project based on using payback? - 🧠ANSWER ✔✔if it is less
than the cutoff period
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY 2
STATEMENT. ALL RIGHTS RESERVED
, discounted payback means cash flows are discounted at the ____________.
Meaning it does consider the TVM of money. Therefore, it regards cash flows
_____________ the cutoff period more than regular payback. - 🧠ANSWER
✔✔WACC, beyond (it's more long term than regular payback)
Net present value is the ? - 🧠ANSWER ✔✔PV of expected cash flow of an
investment
What is used as the discount rate for NPV? - 🧠ANSWER ✔✔Wacc
When do we accept a project doing NPV? - 🧠ANSWER ✔✔if the NPV is greater
than zero (if it's a positive number)
the IRR comes out as an (percentage/number)? - 🧠ANSWER ✔✔percentage
IRR is the ? - 🧠ANSWER ✔✔return generated from est cash flows
What is different about MIRR than IRR? ( - 🧠ANSWER ✔✔assumes cash flows
are reinvested at the WACC rather than the IRR
accommodates non-conventional cash flows
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY 3
STATEMENT. ALL RIGHTS RESERVED
