Question 1 Question 1 . 1- Which criteria assumes that the cash flows can be reinvested at a rate that may be unrealistic? Answer . a. . a- MIRR . . b. . b-Payback Period . . c. . c- IRR . . d. . d-NPV A decrease in the discount rate (or wacc) used in an NPV calculation will have the following affect on the IRR of a project: Answer a. No impact on IRR b. Force IRR to equal WACC c. Decrease IRR d. Increase IRR According to the Dividend Discount Model if dividends are expected to be constant then the price of the stock will... Answer a. Increase b. Remain Constant c. Decrease d. Impossible to know . An increase in the required return for a stock will have what effect on today's price for that stock according to the dividend discount model? Answer . . a. . A- Price will decrease . . b. . B- Price will increase . . c. . C- Price cannot be predicted . . d. . D- Price will remain the same . . Which criteria will lead to accept/reject decisions that agree more closely with NPV for mutually exclusive projects? Answer . . a. . A- Payback Period . . b. . B- MIRR . . c. . C- Accounting Break Even . . d. . D- IRR . . According to what we discussed in class, what is the primary reason that Payback Period is so commonly used in business today? . Answer a. - It is the most theoretically sound. b. - It is the easiest to do and understand. c. - It gives an accurate measure of the value of a project. d. - It agrees most closely with NPV . Which cash flows are taken into account when using Payback Period? Answer . . a. . A- Only cash flows after payback is achieved. . . b. . B- All cash flows that are not "sunk costs" . . c. . C- Only cash flows before payback is achieved. . . d. . D- All cash flows . . If the IRR is less than the weighted average cost of capital, then NPV must be... Answer . . a. . A- Zero . . b. . B- Positive . . c. . C- Equal to MIRR . . d. . D- Negative . . If a company plans on paying its first dividend 15 years from today, the dividend discount model will calculate a price that is correct for... Answer . . a. . A- Correct for all time. . . b. . B- 15 years from today . . c. . C- Today . . d. . D- 14 years from today . . The required return for a given stock is 8% and economic growth is forecast to be 10% for the foreseeable future. What is the maximum rate that can be used for constant growth g in the dividend discount model? . Answer a. - 8% b. - g can be set to any value. c. - 5% d. - 10% CLICK HERE TO GET THE ANSWER !!!! Question 1 Question 1 . 1- Which criteria assumes that the cash flows can be reinvested at a rate that may be unrealistic? Answer . a. . a- MIRR . . b. . b-Payback Period . . c. . c- IRR . . d. . d-NPV A decrease in the discount rate (or wacc) used in an NPV calculation will have the following affect on the IRR of a project: Answer a. No impact on IRR b. Force IRR to equal WACC c. Decrease IRR d. Increase IRR According to the Dividend Discount Model if dividends are expected to be constant then the price of the stock will... Answer a. Increase b. Remain Constant c. Decrease d. Impossible to know . An increase in the required return for a stock will have what effect on today's price for that stock according to the dividend discount model? Answer . . a. . A- Price will decrease . . b. . B- Price will increase . . c. . C- Price cannot be predicted . . d. . D- Price will remain the same . . Which criteria will lead to accept/reject decisions that agree more closely with NPV for mutually exclusive projects? Answer . . a. . A- Payback Period . . b. . B- MIRR . . c. . C- Accounting Break Even . . d. . D- IRR . . According to what we discussed in class, what is the primary reason that Payback Period is so commonly used in business today? . Answer a. - It is the most theoretically sound. b. - It is the easiest to do and understand. c. - It gives an accurate measure of the value of a project. d. - It agrees most closely with NPV . Which cash flows are taken into account when using Payback Period? Answer . . a. . A- Only cash flows after payback is achieved. . . b. . B- All cash flows that are not "sunk costs" . . c. . C- Only cash flows before payback is achieved. . . d. . D- All cash flows . . If the IRR is less than the weighted average cost of capital, then NPV must be... Answer . . a. . A- Zero . . b. . B- Positive . . c. . C- Equal to MIRR . . d. . D- Negative . . If a company plans on paying its first dividend 15 years from today, the dividend discount model will calculate a price that is correct for... Answer . . a. . A- Correct for all time. . . b. . B- 15 years from today . . c. . C- Today . . d. . D- 14 years from today . . The required return for a given stock is 8% and economic growth is forecast to be 10% for the foreseeable future. What is the maximum rate that can be used for constant growth g in the dividend discount model? . Answer a. - 8% b. - g can be set to any value. c. - 5% d. - 10% CLICK HERE TO GET THE ANSWER !!!!

Question 1

Question 1

.    
1-    Which criteria assumes that the cash flows can be reinvested at a rate that may be unrealistic?

Answer

	.    a.	.     a- MIRR
.	.    b.	.    b-Payback Period
.	.    c.	.     c- IRR
.	.    d.	.      d-NPV

A decrease in the discount rate (or wacc) used in an NPV calculation will have the following affect on the IRR of a project:

Answer

	a.	No impact on IRR
	b.	Force IRR to equal WACC
	c.	Decrease IRR
	d.	Increase IRR

According to the Dividend Discount Model if dividends are expected to be constant then the price of the stock will...

Answer

	a.	Increase
	b.	Remain Constant
	c.	Decrease
	d.	Impossible to know

.    An increase in the required return for a stock will have what effect on today's price for that stock according to the dividend discount model?

Answer

.	.    a.	.    A-  Price will decrease
.	.    b.	.     B- Price will increase
.	.    c.	.     C- Price cannot be predicted
.	.    d.	.     D- Price will remain the same

.    



.    Which criteria will lead to accept/reject decisions that agree more closely with NPV for mutually exclusive projects?     

Answer

.	.    a.	.      A- Payback Period
.	.    b.	.     B- MIRR
.	.    c.	.     C- Accounting Break Even
.	.    d.	.      D- IRR

.    



.       According to what we discussed in class, what is the primary reason that Payback Period is so commonly used in business today?

.       Answer

	a.	- It is the most theoretically sound.
	b.	-  It is the easiest to do and understand.
	c.	- It gives an accurate measure of the value of a project.
	d.	- It agrees most closely with NPV

.    Which cash flows are taken into account when using Payback Period?     

Answer

.	.    a.	.    A-  Only cash flows after payback is achieved.
.	.    b.	.     B-  All cash flows that are not "sunk costs"
.	.    c.	.      C- Only cash flows before payback is achieved.
.	.    d.	.     D- All cash flows

.    



.      If the IRR is less than the weighted average cost of capital, then NPV must be...     

Answer

.	.    a.	.    A-  Zero
.	.    b.	.    B-  Positive
.	.    c.	.    C-  Equal  to MIRR
.	.    d.	.     D-  Negative

.    



.    If a company plans on paying its first dividend 15 years from today, the dividend discount model will calculate a price that is correct for...     

Answer

.	.    a.	.     A- Correct for all time.
.	.    b.	.     B- 15 years from today
.	.    c.	.     C-  Today
.	.    d.	.      D- 14 years from today

.    



.       The required return for a given stock is 8% and economic growth is forecast to be 10% for the foreseeable future.  What is the maximum rate that can be used for constant growth g in the dividend discount model?

.       Answer

	a.	-  8%
	b.	- g can be set to any value.
	c.	-  5%
	d.	- 10%

 

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