9. Present value calculations: A. can help the creation of value B. can provide

Question

9. Present value calculations: A. can help the creation of value B. can provide managers with a means of identifying the investment choices C. do not help the creation of value D. A and B E. B and C

10. When projected assets are more than projected liabilities and equity the plug will be:

A notes payable B. notes receivable C. cash D. none of the above

11. Earl is saving for a pair of jet skis, how much money must Earl put aside now to receive $14,000 six years from now if the money is compounding at an 8% annual compound rate:

A $8847 B. $8800 C. $8822 D. $8810 E. none of the above

12. Which of the following methods helps to size the investments: a. payback b. present value payback c. present value index d. irr e. none of the above

Explanation / Answer

9) Present Value calculations : Can provide managers with a means of identifying the investment choices

10) When projected assets are more than projected liabilities and equity then the plug will be cash

11) Present value = Future Value / ( 1+R) ^N

= 14000/(1+0.08)^6 i.e 8822

12) Present value index helps to size the investments

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