APU FINC600 Week 4 and 8 Quiz (2016 Version)/Verified Answer/All correct/Score 100%

APU FINC600 Week 4 and 8 Quiz (2016 Version)



Question 1 of 25

State the "rate of return rule."

A rate of return is the profit or loss on an investment over a particular time period, expressed as

a gain of the investment’s cost. On investment this gains are defined as income received plus any

capital gains appreciate on the sale of the investment. Also rate of return as the net amount

of inexpensive cash flows received on an investment. Choosing the right investments and projects

to fund is important for any successful investor or business and for this the rate of return can

help boost shareholder value and make those important decisions.

Question 2 of 25

Using the company cost of capital to evaluate a project is:

I) Always correct

II) Always incorrect

III) Correct for projects that are about as risky as the average of the firm's other assets

A.I only

B.II only

C.III only

D.I and III only

Question 3 of 25

Net Working Capital should be considered in project cash flows because:

A. Firms must invest cash in short-term assets to produce finished goods

B. They are sunk costs