1. Financial planning, when properly executed:
helps ensure that adequate financing is in place to support the desired level of growth.
ensures that the primary goals of senior management are fully achieved.
reduces the necessity of daily management oversight of the business operations.
ignores the normal restraints encountered by a firm.
eliminates the need to plan more than one year in advance.
2. Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. Which statement would be correct?
a) The NPV of a relatively low-risk project should be found using a relatively high cost of capital.
b) The lower the cost of capital used to calculate a project's NPV, the lower the calculated NPV will be.
c) If a project's NPV is less than zero, then its IRR must be less than the cost of capital.
d) A project's NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the cost of capital.