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3- Pay back period calculation considering the discounted cash flow.

Select one:

a. True.

b. False.

4-

Profitability index determining for every dollar that firm spent on project and how much they are getting back.

Select one:

a. False.

b. True.

5-

Profitability index is the amount of return an investor need to make in order to provide that next investment further down the line.

Select one:

a. True.

b. False.

6-

Project A has an expected return of $500 and a standard deviation of $390. Project B has expected return of $2,300 and a standard deviation of $520. Using coefficient of variation, which has a lower risk?

Select one:

a. Project A, because coefficient of variation is 0.78

b. Project A, because coefficient of variation is 7.8

c. Project B, because coefficient of variation is 0.226

d. Project B, because coefficient of variation is 0.622

7-

Required rate of return by capital provider call discount rate.

Select one:

a. False.

b. True.

9-

Smart Company is considering two investments both of which cost $14,000. The cash flows for project A in year 1 $2,000. Year 2 $5,000. Year 3 $8,500. While the cash flows for project B are in year 1 $3,000. Year 2 $2,500 and year 3 $9,500. assuming a cost of capital of 10%, which of the two projects should be chosen based on net present value approach ?

Select one:

a. Project B which has a net present value of $2,069.12

b. Project A which has a net present value of $1,663.14

c. Project B which has a net present value of $6,206.14

d. Project A which has a net present value of $6,163.25.

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