Home / Questions / Consider the following list of projects: Project Investment NPV A 135,000 6,000 B
Consider the following list of projects:
|
Project |
Investment |
NPV |
|
A |
135,000 |
6,000 |
|
B |
200,000 |
30,000 |
|
C |
125,000 |
20,000 |
|
D |
150,000 |
2,000 |
|
E |
175,000 |
10,000 |
|
F |
75,000 |
10,000 |
|
G |
80,000 |
9,000 |
|
H |
200,000 |
20,000 |
|
I |
50,000 |
4,000 |
2. Assuming that your capital is constrained, so that you only have $600,000 available to invest in projects, which projects should you invest in and in what order?
a. CBFH
b. CBGF
c. BCFG
d. CBFG
Multiple choice:
3. Which of the following statements is FALSE?
a. Because value is lost when a resource is used by another project, we should include the opportunity cost as an incremental cost of the project.
b. Sunk costs are incremental with respect to the current decision regarding the project and should be included in its analysis.
c. Overhead expenses are associated with activities that are not directly attributable to a single business activity but instead affect many different areas of the corporation.
d. When computing the incremental earnings of an investment decision, we should include all changes between the firm's earnings with the project versus without the project.
4. Which of the following statements is FALSE?
a. Many projects use a resource that the company already owns.
b. When evaluating a capital budgeting decision, we generally include interest expense.
c. Only include as incremental expenses in your capital budgeting analysis the additional overhead expenses that arise because of the decision to take on the project.
d. As a practical matter, to derive the forecasted cash flows of a project, financial managers often begin by forecasting earnings.
5. Which of the following cash flows are relevant incremental cash flows for a project that you are currently considering investing in?
a. The tax savings brought about by the project's depreciation expense
b. The cost of a marketing survey you conducted to determine demand for the proposed project
c. Interest payments on debt used to finance the project
d. Research and Development expenditures you have made
6. An exploration of the effect on NPV of changing multiple project parameters is called:
a. scenario analysis.
b. IRR analysis.
c. accounting break-even analysis.
d. sensitivity analysis.
Thanks!!
Dec 03 2019 View more View Less
Sony Music Entertainment and the Evolution of the Music Industry 1A. How has competition in the music entertainment industry changed over the years? 2B. How do you get yo...
May 26 2020Prepare the necessary journal entries from the following information for Bonnie’s Corp which uses a perpetual inventory system. a. Purchased raw material on account, $...
May 30 2018To make sure you have mastered pronouns, read the following sentences and identify any faulty pronoun use. Write an improved form in the space provided. Each sentence con...
Jun 16 2021Pasta Enterprises has $42,000 in cash, $20,000 in inventory, $17,000 balance due to creditors, and $21,000 balance due from customers. What is the amount of owners’ equity
Mar 29 2020Gabriel, Harris, and Ida are members of Jeweled Watches, LLC. What are their options with respect to the management of their firm? (See LLC Management and Operation.
Jul 07 2021What is the complete electron configuration of
May 24 2021Write kpis-key performance indicators for toyota company?1)Revenuse2)profit3)customer satisfaction
Apr 12 2021Sketch a direction field for the differential equation. Then use it to sketch three solution curves.
Jun 16 2021Delo Co. has a debt ratio of 0.50, a total assets turnover of 0.25, and a profit margin of 10%.The president is unhappy with the current return on equity, and he thinks i...
Jun 20 2021Copper Grill Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Southwest. Copper Grill Restaurant Corporation, which had 50,000 shares of c...
Apr 02 2020