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WorksheetsCapital Budgeting
Total questions: 8
Worksheet time: 12mins
If the net present value of project A is +$50, and of project B is +$80, then the NPV of the combined project is:
$30
$50
$80
$130
If the NPV of project A is +$80, and that of project B is -$40, and that of project C is +$20, what is the NPV of the combined project?
$100
-$40
$60
$20
Given the following cash flow for the startup “Healthy Life”: C0=-2000, C1=+500, C2=+700, C3=+1200, C4=+1500, C5=$3000 calculate the NPV of the startup using a 10% discount rate.
$2822
$2102
$2566
$6822
Which one of the following will increase the NPV of a project?
An increase in the discount rate.
Increasing the amount of the initial cash outflow
Decreasing the amount of each cash inflow
A decrease in the discount rate
Payback period rule accepts all projects for which the payback period is:
Greater than the cut-off value.
Less than the cut-off value.
Positive
An integer
The advantage of the payback period is :
Adjustment for uncertainty of early CF
It is simple to calculate and use
Does not discount CF
None of the above
The discount rate that makes the net present value of an investment exactly equal to zero is called the:
Internal rate of return
External rate of return
WACC
Average rate of return
What is the internal rate of return on an investment with the following cash flows?
8.00%
8.93%
10.00%
10.45%
