27 multiple choice finance questions

Overview

What is the payback period of project F?

Question 1 options:

	2.65 years
	2.45 years
	2.05 years
	2.75 years
	2.55 years

What is the payback period of project G?

Question 2 options:

	2.4 years
	2.8 years
	2.6 years
	2.3 years
	2.5 years

What is the payback period of project H?

Question 3 options:

	3.4 years
	3.5 years
	3.15 years
	2.75 years
	2.35 years

Which projects should we accept given a 3-year cutoff period?

Question 4 options:

	F & H
	F, G, & H
	G & H
	G
	F&G

Becker Inc. uses discounted payback period for projects under $25,000 and has a cut off period of four years for these small-value projects. Two projects, R and S, are under consideration. The anticipated cash flows are listed in the following table.

What is the discounted payback for project R with an 8% discount rate?

Question 5 options:

	3.19
	2.88
	4.15
	3.41
	3.77

What is the discounted payback for project S given a 8% discount rate?

Question 6 options:

	3.58
	3.25
	2.12
	2.95
	2.56

If Becker uses an 8% discount rate, which projects are accepted?

Question 7 options:

	Neither
	R
	S
	R & S

Lepton Industries has a project with the following projected cash flows:

Initial cost: $468,000

Cash flow year one: $135,000

Cash flow year two: $240,000

Cash flow year three: $185,000

Cash flow year four: $135,000

What is the NPV if the discount rate is 8%?

Question 8 options:

	103,919.66
	90,947.08
	98,397.23
	108,849.31
	94,526.80

What is the NPV if the discount rate is 14%?

Question 9 options:

	41,837.97
	37,409.33
	40,218.90
	38,015.42
	39,893.83

What is the NPV if the discount rate is 20%?

Question 10 options:

	-16,863.40
	-16,489.34
	-17,588.84
	-16,668.97
	-18,483.43

Under which discount rates should the project be accepted?

Question 11 options:

	14% & 20%
	8%
	14%
	8, 14, & 20%
	8% & 14%

Singing Fish Fine Foods has $2,000,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the deli section of the store for additional food service. The estimated annual after-tax cash flow of this project is $600,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $530,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.5% and the appropriate discount rate for the wine section is 9.0%. What is the equivalent annual annuity for the deli?

Question 12 options:

	71,955.64
	79,127.16
	78,672.49
	76,489.30
	65,018.42

What is the equivalent annual annuity for the wine?

Question 13 options:

	84,160.43
	76,575.37
	91,330.66
	77,241.00
	80,707.39

Note: Each project has a $1.5 million required initial expense.

What is the IRR for project Q?

Question 14 options:

	4.93
	5.63
	5.94
	4.52
	5.37

What is the IRR for Project R?

Question 15 options:

	9.79
	11.17
	10.18
	10.42
	8.84

What is the IRR for Project S?

Question 16 options:

	23.19
	24.36
	24.99
	23.57
	25.39

What is the MIRR for Project Q?

Question 17 options:

	4.05
	4.88
	4.29
	4.65
	4.79

What is the MIRR for Project R?

Question 18 options:

	9.36
	9.94
	9.04
	9.19
	8.44

What is the Profitability Index for Project A?

Question 19 options:

	0.9177
	1.0921
	1.0619
	1.0388
	0.8752

What is the Profitability Index for Project B?

Question 20 options:

	1.0334
	1.1145
	1.0647
	1.0122
	1.0596

What is the Profitability Index for Project C?

Question 21 options:

	.732
	.922
	.823
	.997
	.948

Which projects should be accepted?

Question 22 options:

	B
	A
	A & B
	Neither

Risky Business is looking at a project with the estimated cash flows as follows:

Initial Investment at start of project: $3,600,000

Cash Flow at end of year one: $500,000

Cash Flow at end of years two through six: $625,000 each year

Cash Flow at end of years seven through nine: $530,000 each year

Cash Flow at end of year ten: $385,000

Risky Business uses a discount rate of 14%.

What is the IRR of this project?

Question 23 options:

	9.030
	7.642
	9.721
	9.335
	9.101

What is the payback period of this project?

Question 24 options:

	6.72 years
	5.96 years
	5.73 years
	5.62 years
	5.57 years

What is the NPV of this project?

Question 25 options:

	–$543,674.23
	–$614,797.27
	–$675,432.65
	–$435,745.15
	–$575,654.25

What is the Profitability Index of this project?

Question 26 options:

	0.8967
	0.7962
	0.7480
	0.8049
	0.8292

Which decision rules will accept the project?

Question 27 options:

	NPV, IRR
	NPV, PI
	IRR, PI
	None
	NPV