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WorksheetsProject Evaluation and Finance Worksheet
Total questions: 84
Worksheet time: 42mins
If the annual depreciation charge for a project is increased in a particular operating year, what is the expected impact on the project’s after-tax cash flow for that year?
It raises the project’s after-tax cash inflow because of the depreciation tax shield.
It does not influence cash flow at all since depreciation is a non-cash expense.
It increases the project’s accounting profit.
It increases the amount of corporate income tax the project must pay.
Which of the following is a key limitation of sensitivity analysis in project evaluation?
It ignores the statistical correlation among input variables.
It cannot test two variables moving at the same time.
It cannot identify which input variable is most critical to project viability.
It does not allow us to change one driver while holding others constant.
When appraising the market competitiveness of a project's output (product/service), which aspects are typically assessed?
The distribution network and sales promotion strategy.
The product’s technical performance, perceived quality, and usefulness.
The pricing level relative to competitors.
All of the above.
You are comparing two mutually exclusive investment projects whose economic lives (useful operating lives) are not the same. Which decision criterion is the most appropriate to make a fair comparison?
Internal Rate of Return (IRR).
Net Present Value (NPV).
Payback Period / Discounted Payback Period.
Equivalent Annual Annuity (EAA).
In risk analysis using simulation (e.g. Monte Carlo simulation), what is considered a drawback?
You must specify the probability distribution for each key input variable.
You cannot model several inputs fluctuating at the same time.
You cannot embed relationships between variables in the model.
The method cannot estimate the probability that the project succeeds or fails.
Suppose Project A and Project B yield exactly the same Net Present Value (NPV) when discounted at the required rate of return. This implies:
The two projects generate identical yearly cash flows.
Both projects face the same discount rate by definition.
Both projects deliver equivalent financial value (i.e. equal economic worth) to the investor.
The two projects will report the same net income.
Regarding interest on debt during the construction / implementation phase of a project, which statement is correct?
Only the interest incurred in Year 1 of construction is counted in total investment; later interest is excluded.
Interest accrued during the grace period is not capitalized into the project’s total investment cost.
Interest during construction is always excluded from the project cash flow statement used for appraisal (TIPV cash flow).
Interest during construction refers only to interest without any grace period.
When applying the Capital Asset Pricing Model (CAPM) to estimate the project’s required rate of return, the term Rm−Rf is referred to as:
The market risk premium.
The risk-free benchmark rate.
The prevailing market interest rate.
The adjusted risk-free yield.
For land-use rights with an indefinite term (no expiry), why is the terminal (salvage) value of the land at the end of the project typically assumed to be equal to its original acquisition cost in the cash flow analysis?
Because accounting policy requires it.
Because we only want to capture the project’s “internal” efficiency and ignore external gains.
Because such land-use rights are not depreciated/amortized.
Because any appreciation in land value over time is assumed to be negligible.
The cost of preparing the project’s Environmental Impact Assessment (EIA) report should be treated as:
An other expense that is excluded from both total investment and project cash flows.
A cost outside the total investment and also excluded from cash flow projections.
A cost that is capitalized in total investment but omitted from cash flow calculations.
A cost that is included in total investment and also included in the project cash flow forecast.
An increase in working capital requirement during the year will:
Reduce the project’s investment cash flow.
Increase the project’s operating cash flow.
Reduce the project’s operating cash flow.
Increase the project’s financing cash flow.
Which principle of project cash flow forecasting is NOT correct?
Include opportunity costs in project cash flows.
Project value must be based on incremental cash flows.
Include indirect costs in project cash flows.
Include sunk costs in project cash flows.
If the corporate income tax rate is 20% , when interest expenses increase by 100 units, then:
After-tax profit increases by 80 units.
After-tax profit decreases by 20 units.
After-tax profit decreases by 80 units.
After-tax profit increases by 20 units.
Projects are classified as independent, dependent, or mutually exclusive projects based on:
Importance and construction scale.
Form of investment.
Project implementing entity.
Investment decision-making purpose.
Which of the following statements indicates that two projects are independent?
Accepting or rejecting this project does not affect accepting or rejecting the other project.
Accepting this project requires abandoning the other project.
None of the statements indicates independence.
Accepting or rejecting this project leads to accepting or rejecting the other project.
The difficulty in analyzing the impact of inflation on project effectiveness is:
Many items cannot be converted from real to nominal prices.
Difficult to estimate the impact of inflation on each project cash flow.
Considering inflation reduces project effectiveness.
Using nominal prices does not accurately estimate financial efficiency.
Which of the following items does NOT belong to operating cash flows under the direct method from the Total Investment perspective?
Interest expenses.
Sales revenue.
Cost of raw material purchase.
Selling staff salaries.
To discount the EPV (Equity Present Value) cash flow of a leveraged project, the discount rate used is:
After-tax weighted average cost of capital (WACC).
Project loan interest rate.
Required return on equity.
Industry average rate of return.
When choosing the project’s design capacity, it is based on which factors?
Organizational and managerial capability, investor’s financial capacity.
All are correct.
The value of an expansion project depends on:
The incremental cash flows generated by the project
The incremental revenue generated by the project
The total cash flows generated by the project
The accounting profit generated by the project
For public-sector projects, the appraisal of socio-economic efficiency is to:
Evaluate the project’s costs and benefits from the perspective of the entire economy and society
All are correct
Identify the project’s benefits from the perspective of the whole economy
Assess the project’s impact on economic development
Which of the following is a funding requirement of a project?
Investment in other enterprises
Financial investment
Debt repayment
Dividend distribution
Economic analysis is the analysis of:
All of the above
Income distribution in the economy
The ability to meet the basic needs of the economy
The project’s contribution to economic growth
Financial analysis of a project is the analysis of financial effectiveness for:
Banks
Investors
All of the above
Shareholders
The project objectives need to be determined in which stage of the project cycle?
Pre-feasibility study
Feasibility study
Investment opportunity study
Project implementation
Which of the following is a characteristic of an investment project?
Human resources required for the project must be identified
All of the above
Potential risks must be identified
The uniqueness of the project’s product must be described
Investment projects are usually implemented within a period of time that is:
With no determined ending time
Short
Relatively long
Can be either short or relatively long
Which of the following statements is correct?
The capital scale of an investment project is often not determined in advance
The definition of a project does not mention capital scale
The total investment of a project is usually very large
None of the above is correct
Market analysis refers to the analysis of:
Markets for project input products
All of the above
Labor market
Markets for project output products
Project liquidation is carried out in which case?
The investment project has reached the end of its operating life
All of the above
The investor is forced to cease operations
The investor goes bankrupt
A project is considered feasible when:
It is practically implementable
All of the above
It complies with all legal regulations
It brings financial and/or socio-economic effectiveness
Project implementation includes:
All of the above
Project preparation
Project operation
Project design and construction
The initial investment capital of a project can take the form of:
Financial assets, tangible assets, and intangible assets
Fixed capital and working capital
All of the above
Equity capital and borrowed capital
A project aimed at improving and enhancing the quality of products, goods, and services is:
A deep investment project (vertical investment)
All of the above
A stand-alone investment project
An expansion investment project
The project analysis framework covers the following aspects:
Market – Technical – Human resources
Market – Technical – Human resources – Finance – Economy – Society
Market – Technical – Human resources – Finance – Economy
Market – Technical – Human resources – Finance
Which of the following statements is correct?
All projects, regardless of investment capital, must go through two stages: pre-feasibility and feasibility studies
Projects with large investment capital must go through both pre-feasibility and feasibility studies, while smaller projects only require a feasibility study
All projects, regardless of investment capital, only need a feasibility study
Depending on the size and nature of the project, the competent authority will decide whether a feasibility study alone is sufficient or if both pre-feasibility and feasibility studies are required
Technical analysis is the analysis of aspects such as:
Project materials and inputs
All of the above
Project construction and equipment installation
Environmental impacts of the project
Private investment projects are aimed at:
Social benefits
Economic benefits
Financial benefits
All of the above
Which of the following is a project investment activity?
Has a start date and an end date
Is done only once
All of the above
Creates a specific product
When deciding whether to invest in a project under consideration, the investor often makes the mistake of:
Accepting a project beyond the investor’s financial capacity
Ignoring a project within the investor’s financial capacity
All of the above
Accepting a bad project and rejecting a good project
The stage in which more accuracy is required for the key project variables is:
Investment opportunity study
Pre-feasibility study
Project operation
Feasibility study
A project can be appraised from which perspective?
Financial
All of the above
Social
Economic
Reviewing once again the financial, economic, and social criteria is carried out in which appraisal stage?
Detailed design
Feasibility study
Pre-feasibility study
Project operation
In financial analysis/appraisal of a project, which price should be used?
Market price
Shadow price
Real price
Economic price
The role of project appraisal is:
To perform audit and inspection functions throughout the project’s economic life
To avoid implementing ineffective projects while not missing valuable investment opportunities
All of the above
To save the economy’s resources and capital
For private investment projects, the basis for state authorities to grant permits or provide support/incentives is:
Feasibility in market, technical, and management aspects
Economic and social efficiency
All of the above
Financial efficiency
At which stage of the project cycle does the investor participate in appraisal?
Feasibility study
Operation stage
Pre-feasibility study
All stages of the project cycle
What measures should the government take when a project brings financial efficiency to the investor but not economic benefits to the economy?
Remove price ceiling regulations
Subsidies
Raise taxes
All of the above
Which of the following statements is correct?
Appraising market, technical, personnel, and management aspects as a basis for financial appraisal
Project appraisal content is based on each analysis and research content of the project
All of the above
Project appraisal clarifies feasibility in all related aspects of the project to be implemented
For a project to be implemented, it must achieve efficiency in:
Economic aspect
Social aspect
All of the above
Financial aspect
A project is considered feasible when it:
Must be feasible under all appraisal perspectives
All of the above
Must ensure legality, scientific validity, and practicality
Must be feasible in all research aspects
What measures should the government take when a project does not bring financial efficiency to the investor but does bring economic benefits to the economy?
Subsidies
All of the above
Reduce taxes
Provide preferential conditions for the project
Which of the following statements is NOT correct?
Project appraisal helps investors determine capital structure for the project
Project appraisal helps investors control risks
Project appraisal helps investors reduce mistakes in decision-making
Project appraisal helps investors make investment decisions to maximize profit
Investors, banks, and shareholders appraise a project from which perspective?
Basic needs
Financial
Income distribution
Economic
Government agencies appraise projects from which perspective?
Economic
Basic needs
Income distribution
All of the above
The reason a company may terminate an existing project and start a new replacement project is:
Changes in the company’s investment strategy
Changes in consumer preferences
The new project has a higher return than the previous one
All of the above
What measures should the government take when a project brings neither financial efficiency to the investor nor economic benefits to the economy?
No subsidies
The government does not need to take any measures
Reduce taxes
Impose a price ceiling
Conservative estimation, which reduces projected benefits while inflating cost estimates, is done in which appraisal stage?
Feasibility study
Pre-feasibility study
Investment opportunity study
Project operation
For public investment projects, the basis for state agencies to make investment decisions is:
Financial efficiency
Economic and social efficiency
All of the above
Feasibility in market, technical, and management aspects
In appraising the competitiveness of a project’s product in the export market, the appraiser must consider:
Competitors in the intended export market
All of the above
Whether quotas or technical barriers are imposed
Importing countries’ standards
The marketing strategy of a project includes:
All of the above
Sales methods
After-sales services
Delivery methods
Appraising the competitiveness of a project’s product involves considering aspects such as:
Product design
Product quality
Product price
All of the above
Market segmentation is based on:
The project’s marketing strategy
Specific customer behavior
The project’s business strategy
All of the above
Customer analysis in market analysis must answer the question:
Who makes the purchase decision and who participates in the decision?
All of the above
Why do customers buy that product?
What products do customers buy in the market?
The target market of a project can be:
Domestic market
Export market
Import-substitute market
All of the above
Market appraisal is the appraisal aspect carried out:
All of the above
Before the technical aspect
After the financial aspect
After the management and personnel aspect
Industry analysis of the project includes:
Industry life cycle
All of the above
Opportunities and level of competition
Key success factors
Market appraisal is the basis for choosing:
Investment scale
Production plan
Project technology and location
All of the above
Market segmentation must meet the requirement:
Each segment must be clearly differentiated from others
All of the above
The segment must have a sufficiently large scale
Customer behavior in the segment should be as similar as possible
The project can distribute products through channels such as:
Retailers
All of the above
Wholesalers
Direct to consumers
Competitor analysis includes:
All of the above
What are the strongest possible reactions from competitors?
What plans or actions are competitors intending to take?
What are the weaknesses of competitors?
Forecasting the output or sales revenue of the project is based on:
Marketing strategy
Market demand
Factory capacity
All of the above
Appraising the current supply-demand situation of the project’s products on the market will help the appraiser understand:
The project’s potential market share
The project’s target market
Market capacity
All of the above
Forecasting the output of the project’s products supplied to the market is based on:
Statistical data from ministries
All of the above
Industry analysis reports from professional organizations
Data from associations
Forecasting the output of the project’s products supplied to the market is based on:
Statistical data from ministries
All of the above
Industry analysis reports from professional organizations
Data from associations
One of the contents of market appraisal is:
Competitors
All of the above
The project’s target market
Customers and market segmentation
In appraising the project’s competitiveness in terms of price, the appraiser must compare the projected selling price with:
Retail prices if the project sells directly to consumers
Import prices if the project substitutes imported goods
Wholesale prices if the project sells through distribution channels
All of the above
The project’s marketing strategy is developed on the basis of:
Potential market
Human and financial resources
The project’s production program
All of the above
Customers in market analysis include:
Customers buying competitors’ products
Customers buying the project’s products
Customers buying substitute products
All of the above
The project’s marketing strategy is developed in order to:
Save selling costs
Achieve the project’s objectives
Attract customer attention to the project’s products
All of the above
Technical appraisal is the aspect carried out:
After the financial aspect
After the management and personnel aspect
After the market aspect
Before the management and personnel aspect
To choose an appropriate technology, the appraiser must consider which factor?
Socio-economic conditions and the economy’s ability to absorb technology
Future technological trends
Requirements of raw materials and ecological/environmental impacts
All of the above
The appraiser must consider the suitability of raw materials in relation to the following factors:
Labor skill level
Local customs and culture
Planned production capacity of the factory
All of the above
Packaging costs depend on:
Means of transporting products
The project’s product policy
Requirements for preserving finished products
All of the above
