Capital Budgeting

Bunga places $800 in a savings account paying 6% interest compounded annually. She wants to know how much money will be in the account at the end of 5 years. FV?

• $1017

• $1071

• $598

• $1081

Pevita places $1000 in a savings account paying 5% interest compounded annually. She wants to know how much money will be in the account at the end of 8 years?

• $677

• $1744

• $766

• $1477

Pamela wishes to find the present value of $1,700 that will be received 8 years from now (Pam’s opportunity cost is 8%). PV?

• $677

• $918

• $1018

• $1817

Agung wants to know the present value of money if the company's profit in the next 10 years is predicted $2000 (Annual discount rate = 10?

• $5187

• $5087

• $791

• $771

Alex is saving 5-year $1,000 annuities; annuity is an ordinary annuity. Fran Abrams wishes to determine how much money she will have at the end of 5 years, and it earns 7% annually?

• $6153

• $5751

• $5000

• $5571

Suppose a firm has an opportunity to spend $15,000 today on some investment that will produce $17,000 spread out over the next five years cash flow as follows: Year 1 = $3000, Year 2= $5000, Year 3= $4000, Year 4=$3000, and year 5=$2000. Please calculate NPV’s number (using discount rate: 5%).

• $117

• $-117

• $2000

• $-2000

Use problem number 6, please calculate IRR’s number?

• 5.2%

• 12.5%

• 4.7%

• 7.4%

Use problem number 6, please calculate Pay Back Period?

• 2 years

• 3 years

• 4 years

• 5 years

Use number 6, Is this a wise investment?

• Yes

• No

• N/A

• No idea

The following methods are used for risk analysis except.

• Sensitivity Analysis

• Scenario Analysis

• Monte Carlo

• Risk Premium Analysis