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Capital Budgeting

Total questions: 10

Worksheet time: 7mins

Name
Class
Date
1.

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?

a)

$1017

b)

$1071

c)

$598

d)

$1081

2.

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?

a)

$677

b)

$1744

c)

$766

d)

$1477

3.

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?

a)

$677

b)

$918

c)

$1018

d)

$1817

4.

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?

a)

$5187

b)

$5087

c)

$791

d)

$771

5.

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?

a)

$6153

b)

$5751

c)

$5000

d)

$5571

6.

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%).

a)

$117

b)

$-117

c)

$2000

d)

$-2000

7.

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

a)

5.2%

b)

12.5%

c)

4.7%

d)

7.4%

8.

Use problem number 6, please calculate Pay Back Period?

a)

2 years

b)

3 years

c)

4 years

d)

5 years

9.

Use number 6, Is this a wise investment?

a)

Yes

b)

No

c)

N/A

d)

No idea

10.

The following methods are used for risk analysis except.

a)

Sensitivity Analysis

b)

Scenario Analysis

c)

Monte Carlo

d)

Risk Premium Analysis