Fin 534 week 7 quiz 6 (30 questions with answers) 99,99% scored

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  • 1. FIN 534 Week 7 Quiz 6 (30 questions with answers) 99,99% Scored PLEASE DOWNLOAD HEREFinance 534 Week 7 quiz 6Question 1Which of the following statements is CORRECT?Question 2Which of the following statements is CORRECT?Question 3Assume that the economy is in a mild recession, and as a result interest ratesand money costs generally are relatively low. The WACC for two mutuallyexclusive projects that are being considered is 8%. Project S has an IRR of 20%while Project Ls IRR is 15%. The projects have the same NPV at the 8% currentWACC. However, you believe that the economy is about to recover, and moneycosts and thus your WACC will also increase. You also think that the projects willnot be funded until the WACC has increased, and their cash flows will not beaffected by the change in economic conditions. Under these conditions, which ofthe following statements is CORRECT?Question 4Four of the following statements are truly disadvantages of the regular paybackmethod, but one is not a disadvantage of this method. Which one is NOT adisadvantage of the payback method?Question 5Which of the following statements is CORRECT?Question 6Which of the following statements is CORRECT? Assume that the project beingconsidered has normal cash flows, with one outflow followed by a series ofinflows.
  • 2. Question 7Which of the following statements is CORRECT?Question 8Which of the following statements is CORRECT?Question 9Which of the following statements is CORRECT?Question 10Which of the following statements is CORRECT? Assume that the project beingconsidered has normal cash flows, with one outflow followed by a series ofinflows.Question 11Which of the following statements is CORRECT?Question 12Which of the following statements is CORRECT? Assume that the project beingconsidered has normal cash flows, with one outflow followed by a series ofinflows.Question 13Assume that the economy is enjoying a strong boom, and as a result interestrates and money costs generally are relatively high. The WACC for two mutuallyexclusive projects that are being considered is 12%. Project S has an IRR of20% while Project Ls IRR is 15%. The projects have the same NPV at the 12%current WACC. However, you believe that the economy will soon fall into a mildrecession, and money costs and thus your WACC will soon decline. You alsothink that the projects will not be funded until the WACC has decreased, and theircash flows will not be affected by the change in economic conditions. Underthese conditions, which of the following statements is CORRECT?Question 14Which of the following statements is CORRECT?Question 15Which of the following statements is CORRECT?
  • 3. Question 16The relative risk of a proposed project is best accounted for by which of thefollowing procedures?Question 17Which of the following statements is CORRECT?Question 18Rowell Company spent $3 million two years ago to build a plant for a newproduct. It then decided not to go forward with the project, so the building isavailable for sale or for a new product. Rowell owns the building free and clear--there is no mortgage on it. Which of the following statements is CORRECT?Question 19Which of the following should be considered when a company estimates the cashflows used to analyze a proposed project?Question 20Which of the following statements is CORRECT?Question 21A company is considering a new project. The CFO plans to calculate theproject’s NPV by estimating the relevant cash flows for each year of the project’slife (i.e., the initial investment cost, the annual operating cash flows, and theterminal cash flow), then discounting those cash flows at the company’s overallWACC. Which one of the following factors should the CFO be sure to INCLUDEin the cash flows when estimating the relevant cash flows?Question 22Which of the following factors should be included in the cash flows used toestimate a project’s NPV?Question 23Which of the following rules is CORRECT for capital budgeting analysis?Question 24Currently, Powell Products has a beta of 1.0, and its sales and profits arepositively correlated with the overall economy. The company estimates that aproposed new project would have a higher standard deviation and coefficient of
  • 4. variation than an average company project. Also, the new project’s sales wouldbe countercyclical in the sense that they would be high when the overall economyis down and low when the overall economy is strong. On the basis of thisinformation, which of the following statements is CORRECT?Question 25Which of the following statements is CORRECT?Question 26Which of the following procedures does the text say is used most frequently bybusinesses when they do capital budgeting analyses?Question 27A firm is considering a new project whose risk is greater than the risk of the firm’saverage project, based on all methods for assessing risk. In evaluating thisproject, it would be reasonable for management to do which of the following?Question 28When evaluating a new project, firms should include in the projected cash flowsall of the following EXCEPT:Question 29Which of the following is NOT a relevant cash flow and thus should not bereflected in the analysis of a capital budgeting project?Question 30Suppose Tapley Inc. uses a WACC of 8% for below-average risk projects, 10%for average-risk projects, and 12% for above-average risk projects. Which of thefollowing independent projects should Tapley accept, assuming that the companyuses the NPV method when choosing