When we calculate (a. NPV b. IRR c. MIRR d. PI), we input cash flows and initial

Question

When we calculate (a. NPV b. IRR c. MIRR d. PI), we input cash flows and initial cash outlay only. The required rate of return is used in making decisions, not in calculation. 2. Which of the following does NOT consider the concept of time value of money? a. NPV b. IRR c. payback period d. PI e. MIRR 3. Which of the followings bears lowest risk? a. US treasury bills b. Big company long term bonds c. Big company stocks d. small company stocks e. small company long term bonds 4. Sytematic risk of each company is a. diversifiable. b. measured by beta in CAPM. c. asset specific d. defined by the risk free rate 5. In the calculation of Cash FloW From Assets (CFFA) via the indirect method in the capital budgeting, which of the follosings reduces CFFA? a. Decrease in Net Working Capital b. Depreciation Expenses c. Increase in the Net Capital Spending d. Increase in the residual value of the assets. 6. In an efficient capital market a. Nobody can make profit in the markets b. Wrong doing in investment will not lead to a loss. c. The past history shows the capital markets were in the strong form efficiency d. The securities are fairly priced based on their corresponding risks. e. There will be no surprise in the market.

Explanation / Answer

Answer:1 b. IRR

Answer:2 c. Payback period

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