Question 1-A project's net present value, ignoring income taxes, is affected by:
a- the net book value of an asset that is replaced.
b- the depreciation on an asset that is replaced.
c- the depreciation to be taken on assets used directly on the project.
d- proceeds from the sale of an asset that is replaced.
Question 2-A company has unlimited funds to invest at its discount rate. The company should invest in all projects having:
a- an internal rate of return greater than zero.
b- a net present value greater than zero.
c- a simple rate of return greater than the discount rate.
d- a payback period less than the project's estimated life.
Question 3-When the cash flows are the same every period after the initial investment in a project, the payback period is equal to:
a- the net present value.
b- the simple rate of return.
c- the factor of the internal rate of return.
d- the payback rate of return.
Question 4-The project profitability index and the internal rate of return:
a- will always result in the same preference ranking for investment projects.
b- will sometimes result in different preference rankings for investment projects.
c- are less dependable than the payback method in ranking investment projects.
d- are less dependable than net present value in ranking investment projects
Question 5-A preference decision:
a- is concerned with whether a project clears the minimum required rate of return hurdle.
b- comes before the screening decision.
c- is concerned with determining which of several acceptable alternatives is best.
d- All of the above
Question 6-When evaluating a project, the portion of the fixed corporate headquarters expense that would be allocated to the project should be:
a- included as a cash outflow on an after-tax basis by multiplying the expense by one minus the tax rate.
b- included as a cash outflow on an after-tax basis by multiplying the expense by the tax rate.
c- included as a cash outflow on a before-tax basis.
d- ignored.