MC FINA 4200 Final Exam Questions and Answers Graded A+

MC FINA 4200 Final Exam Questions
and Answers Graded A+

Which of the following statements is most correct? - Correct answer-If a project's

internal rate of return (IRR) exceeds the cost of capital, then the project's net

present value (NPV) must be positive.

Project A has an internal rate of return (IRR) of 15 percent. Project B has an IRR of

14 percent. Both projects have a cost of capital of 12 percent. Which of the

following statements is most correct? - Correct answer-Both projects have a

positive net present value (NPV).

Projects L and S each have an initial cost of $10,000, followed by a series of

positive cash inflows. Project L has total, undiscounted cash inflows of $16,000,

while S has total undiscounted inflows of $15,000. Further, at a discount rate of 10

percent, the two projects have identical NPVs. Which project's NPV will be more

sensitive to changes in the discount rate? (Hint: Projects with steeper NPV profiles

are more sensitive to discount rate changes.) - Correct answer-Project L




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