Sample3-351, Online - Sfsu.edu Quiz and Solution
Sample3-351, Online - Sfsu.edu Quiz and Solution
Sample3-351, Online - Sfsu.edu Quiz and Solution
.
1. Given the following cash flows for project A: C 0 = -2000, C1 = +500 , C2 = +1500 and
C3 = +5000, calculate the payback period.
A) One year
B) 2 years
C) 3 years
D) None of the above
Answer : B
Answer: A
3. Given the following cash flows for Project M: C0 = -2,000, C1 = +500, C2 = +1,500, C3 =
+1455, calculate the IRR for the project.
A) 10%
B) 18%
C) 28%
D) None of the above
E) Any of the above
Answer : C
4. Project A has the following cash flows: C0 = +100, C1 = -120. What is the IRR?
A) 10%
B) 15%
C) 20%
D) None of the above
Answer: C
5. In the lecture, how many approaches are discussed to calculate the cash flows from
operations?
A) one
B) two
C) three
D) None of the above
Answer: C
6. In Finance, depreciation is not actual cash flows but affects actual cash flows by
Answer: A
Answer: A
Answer: B
Answer: D
Answer: D
Use the following to answer questions 11-13.
A new project will generate sales of $74 million, costs of $42 million, and depreciation
expense of $10 million in the coming year. The firm’s tax rate is 35%.
A) $10 million
B) $7.7 million
C) $12 million
D) None of the above
Answer: B
12. What is the net profit (or net income or accounting profit) in the coming year ?
A) $10 million
B) $15 million
C) $14.3 million
D) None of the above
Answer: C
A) $24.3 million
B) $30 million
C) $19 million
D) None of the above
Answer: A
Year Revenues
______________________________
1 $40,000
2 30,000
3 20,000
4 10,000
thereafter 0
_____________________________
Expenses are expected to be 40 percent of revenues, and working capital required in each year is
expected to be 20 percent of revenues in the following year. The product requires an immediate
investment of $50,000 in plant and equipment. Suppose the plant and equipment are depreciated
over-four years to a salvage value of zero using straight-line depreciation. The tax rate is 40%.
A) $8,000
B) $10,000
C) $5,000
D) None of the above
Answer: A
A) $48,000
B) $58,000
C) $50,000
D) None of the above
Answer: B
A) $8,000
B) $10,000
C) $12,500
D) None of the above
Answer: C
A) $28,000
B) $30,000
C) $21,400
D) None of the above
Answer: C
A) $18,000
B) $10,600
C) $11,000
D) None of the above
Answer: B
19. What is the cash flow in year 5 ?
A) $800
B) 0
C) $500
D) None of the above
Answer: B
A) $1,6800
B) $16,600
C) $15,600
D) None of the above
Answer: D