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- Date Submitted: 06/22/2016 1:30 AM
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1. The difference between the present value of an investment?s future cash ﬂows and its initial cost is the:

• net present value.

• internal rate of return.

• payback period.

• proﬁtability index.

• discounted payback period.

2. Which statement concerning the net present value (NPV) of an investment or a ﬁnancing project is correct?

• A ﬁnancing project should be accepted if, and only if, the NPV is exactly equal to zero.

• An investment project should be accepted only if the NPV is equal to the initial cash ﬂow.

• Any type of project should be accepted if the NPV is positive and rejected if it is negative.

• Any type of project with greater total cash inﬂows than total cash outﬂows, should always be accepted.

• An investment project that has positive cash ﬂows for every time period after the initial investment should be accepted.

Find the Week 1 Connect Problems answers here FIN 571 Week 1 Connect Problems

3. The primary reason that company projects with positive net present values are considered acceptable is that:

• they create value for the owners of the ﬁrm.

• the project's rate of return exceeds the rate of inﬂation.

• they return the initial cash outlay within three years or less.

• the required cash inﬂows exceed the actual cash inﬂows.

• the investment's cost exceeds the present value of the cash inﬂows.

4. Accepting a positive net present value (NPV) project:

• indicates the project will pay back within the required period of time.

• means the present value of the expected cash ﬂows is equal to the project’s cost.

• ignores the inherent risks within the project.

• guarantees all cash ﬂow assumptions will be realized.

• is expected to increase the stockholders’ value by the amount of the NPV.

Week 2 Connect problems Answers just a click away FIN 571 Week 2 Connect Problems

5. The net present value method of capital budgeting analysis does all of the following except:

• incorporate risk into the analysis.

•...

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