FIN 575 Final Exam 2016 Pdf Download at Studentehelp

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http://www.studentehelp.com/ 23. You are considering a project with an initial cash outlay of $160,000 and expected free cash flows of $40,000 at the end of each year for 6 years. The required rate of return for this project is 10%. What is the project’s payback period? • 4 years • 4.5 years • 6 years • 5 years 24. Project managers manage project cost by • monitoring inventory costs • monitoring opportunity costs • ensuring the work is progressing as planned • ensuring retail costs are controlled
http://www.studentehelp.com/ 25. What is the primary weakness commonly associated with the use of the payback method to evaluate a proposed investment? • This approach fails to take into account the time factor in the time value of money. • The payback method uses the discounted cash flow process. • The payback method is able to recognize cash flows that occur after the payback period. • The payback method is not appropriate for evaluating small projects. 26. Fijisawa, Inc. is considering a major expansion of its product line and has estimated the following free cash flows associated with such an expansion. The initial outlay associated with the expansion would be $1,950,000, and the project would generate free cash flows of $450,000 per year for 6 years. The appropriate required rate of return is 9%. Calculate the net present value and the internal rate of return. • NPV=$66,098, IRR=10.5 • NPV=$72,097, IRR=9.5 • NPV=$68,663, IRR=10.2 • NPV=$69,368, IRR=10
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