Investment Appraisal

Investment Appraisal

University

30 Qs

quiz-placeholder

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Investment Appraisal

Investment Appraisal

Assessment

Quiz

Other

University

Practice Problem

Medium

Created by

Ejaz khan

Used 1+ times

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30 questions

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1.

FILL IN THE BLANK QUESTION

1 min • 1 pt

An investor deposits $10,000 in a fund that pays 6% interest compounded annually. What will be the value of the investment at the end of 5 years (to the nearest dollar)?

2.

FILL IN THE BLANK QUESTION

1 min • 1 pt

How much should be invested today to accumulate $15,000 in 4 years at a compound interest rate of 8% per annum (to the nearest dollar)?

3.

FILL IN THE BLANK QUESTION

1 min • 1 pt

A company is evaluating a project that provides perpetual annual cash inflows of $12,000. If the cost of capital is 10%, what is the present value of the project?

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A machine generates annual savings of $5,000 forever. If the firm’s cost of capital is 12%, what is the maximum price the company should pay for this machine?

$41,667

$60,000

$50,000

$24,000

5.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

A project generates $20,000 per year for 4 years starting at the end of Year 2. If the discount rate is 10%, what is the present value of the cash inflows (to the nearest ten dollars)?

$41,120

$75,820

$63,400

$57,640

6.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

A machine will generate cash inflows of $15,000 annually for 5 years, starting from the end of year 3. The discount rate is 8%. What is the present value of these inflows (to the nearest ten dollars)?

$51,350

$47,550

$59,900

$39,440

7.

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

A company buys equipment for $100,000, eligible for 25% reducing balance capital allowance. The company pays tax at 30% and the discount rate is 10%. The useful life is 4 years for the equipment. What is the present value of tax savings on capital allowance? (to the nearest hundred dollars)

$16,800

$54,300

$23,300

$54,200

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