Homework Answers
Answer to Question No. 17
Option a i.e. Net Present Value is Positive.
Profitability Index is calculating by dividing Present Value of Cash Inflow by Present Value of Cash outflow. Profitability Index of more than 1 indicates, the Present Value of Cash Inflow is more than the Present Value of Cash Outflow.
The excess of Present value of cash inflow over present value of cash outflow also indicates that Net Present Value is positive, because the NPV is excess of PV of Cash Inflow over PV of Cash Outflow.
Answer to Question No. 18
Option d i.e. Net Present Value is negative.
Profitability Index is calculating by dividing Present Value of Cash Inflow by Present Value of Cash outflow. Profitability Index of less than 1 indicates, the Present Value of Cash outflow is more than the Present Value of Cash Inflow.
A shot of Present value of cash inflow over present value of cash outflow also indicates that Net Present Value is negative, because the NPV is excess of PV of Cash Inflow over PV of Cash Outflow.
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17. If the profitably index for a project exceeds 1, then the project's net present value...
Which of the following statements are correct? I. A positive net present value signals an accept...
Which of the following statements are correct? I. A positive net present value signals an accept decision. II. Projects should be accepted when the profitability index is greater than 1. III. A payback period that is less than the required period signals an accept decision. IV. When the internal rate of return exceeds the required return, a project should be accepted.
18. Which of the following is NOT true about the internal rate of return: A) A...
18. Which of the following is NOT true about the internal rate of return: A) A good project is one with IRR greater than the required return. B) IRR is the discount rate that results in a zero net present value for the project. C) Crossover rate for two projects is the IRR of the project with the difference of the cash flows of the two projects.. D) For two projects of the same size, IRR will usually choose the...
Which one of the following indicates that a project should be rejected? O1) Payback period that...
Which one of the following indicates that a project should be rejected? O1) Payback period that is shorter than the requirement period 2) Negative net present value 3) Internal rate of return that exceeds the required return 4) Profitability index is greater than 1.0 5) Positive net present value
Which one of the following indicates that a project is definitely acceptable? A. Profitability index greater than...
Which one of the following indicates that a project is definitely acceptable? A. Profitability index greater than 1.0 B. Negative net present value C. Modified internal rate return that is lower than the requirement D. Zero internal rate of return E. Positive average accounting return
An independent project should be accepted if it produces a net present value that is less...
An independent project should be accepted if it produces a net present value that is less than zero. has an IRR greater than the required rate of return. has an IRR greater than zero. produces a profitability index greater than or equal to zero.
A project's is computed as the present value of project related cash inflows and outflows. Select...
A project's is computed as the present value of project related cash inflows and outflows. Select one: O A. internal rate of return B. net present value C. present value index O D. accounting rate of return
Which one of the following statements is correct? Assume cash flows are conventional. Explain how you...
Which one of the following statements is correct? Assume cash flows are conventional. Explain how you got your answer A. If two projects are mutually exclusive, you should select the project with the shortest payback period. B. The profitability index will be greater than 1.0 when the net present value is negative. C. Projects with conventional cash flows may sometimes have multiple internal rates of return. D. If the required return exceeds IRR, the profitability index will be less than...
A project should be accepted when the: Select one: a. Payback period is greater than the...
A project should be accepted when the: Select one: a. Payback period is greater than the prescribed number of years. O b. IRR exceeds the required rate. O c. Net present value is negative. O d. AAR is less than the targeted AAR. Oe. Profitability index is less than 1.0.
of a project's future cash . .. A project's profitability index is equal to il :...
of a project's future cash . .. A project's profitability index is equal to il : ratio of the _ nows to the project's !! sh line ... Thi nel present value; initial cash outlay present value; depreciable basis net present value; depreciable basis (c! None of the above Twa mutually exclusive investment proposals have "scale differences" (i.e., the cost of the projects differ). Ranking these projects on the basis of IRR, NPV, and Pl methods give contradictory results. (a)...
The profitability index is cakulated by dividing the project's net present value by the present value...
The profitability index is cakulated by dividing the project's
net present value by the present value of the projected cash
outflows
The profitability index is calculated by dividing the project's net present value by the present value of the projected cash outflows. True • False
18. Which of the following is NOT true about the internal rate of return: A) A good project is one with IRR greater than the required return. B) IRR is the discount rate that results in a zero net present value for the project. C) Crossover rate for two projects is the IRR of the project with the difference of the cash flows of the two projects.. D) For two projects of the same size, IRR will usually choose the...
Which one of the following indicates that a project should be rejected? O1) Payback period that is shorter than the requirement period 2) Negative net present value 3) Internal rate of return that exceeds the required return 4) Profitability index is greater than 1.0 5) Positive net present value
A project's is computed as the present value of project related cash inflows and outflows. Select one: O A. internal rate of return B. net present value C. present value index O D. accounting rate of return
A project should be accepted when the: Select one: a. Payback period is greater than the prescribed number of years. O b. IRR exceeds the required rate. O c. Net present value is negative. O d. AAR is less than the targeted AAR. Oe. Profitability index is less than 1.0.
of a project's future cash . .. A project's profitability index is equal to il : ratio of the _ nows to the project's !! sh line ... Thi nel present value; initial cash outlay present value; depreciable basis net present value; depreciable basis (c! None of the above Twa mutually exclusive investment proposals have "scale differences" (i.e., the cost of the projects differ). Ranking these projects on the basis of IRR, NPV, and Pl methods give contradictory results. (a)...
The profitability index is cakulated by dividing the project's
net present value by the present value of the projected cash
outflows
The profitability index is calculated by dividing the project's net present value by the present value of the projected cash outflows. True • False
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