2022年新版羅斯公司理財題庫全集

1、Chapter 05Net Present Value and Other Investment Rules Multiple Choice Questions1.The difference between the present value of an investment and its cost is the:A.net present value.B.internal rate of return.C.payback period.D.profitability index.E.discounted payback period.2.Which one of the followin

2、g statements concerning net present value (NPV) is correct?A.An investment should be accepted if, and only if, the NPV is exactly equal to zero.B.An investment should be accepted only if the NPV is equal to the initial cash flow.C.An investment should be accepted if the NPV is positive and rejected

3、if it is negative.D.An investment with greater cash inflows than cash outflows, regardless of when the cash flows occur, will always have a positive NPV and therefore should always be accepted.E.Any project that has positive cash flows for every time period after the initial investment should be acc

4、epted.3.The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the:A.net present value.B.internal rate of return.C.payback period.D.profitability index.E.discounted cash period.4.Which one of the following statements is

5、 correct concerning the payback period?A.An investment is acceptable if its calculated payback period is less than some pre-specified period of time.B.An investment should be accepted if the payback is positive and rejected if it is negative.C.An investment should be rejected if the payback is posit

6、ive and accepted if it is negative.D.An investment is acceptable if its calculated payback period is greater than some pre-specified period of time.E.An investment should be accepted any time the payback period is less than the discounted payback period, given a positive discount rate.5.The length o

7、f time required for a projects discounted cash flows to equal the initial cost of the project is called the:A.net present value.B.internal rate of return.C.payback period.D.discounted profitability index.E.discounted payback period.6.The discounted payback rule states that you should accept projects

8、:A.which have a discounted payback period that is greater than some pre-specified period of time.B.if the discounted payback is positive and rejected if it is negative.C.only if the discounted payback period equals some pre-specified period of time.D.if the discounted payback period is less than som

9、e pre-specified period of time.E.only if the discounted payback period is equal to zero.7.The discount rate that makes the net present value of an investment exactly equal to zero is called the:A.external rate of return.B.internal rate of return.C.average accounting return.D.profitability index.E.eq

10、ualizer.8.An investment is acceptable if its IRR:A.is exactly equal to its net present value (NPV).B.is exactly equal to zero.C.is less than the required return.D.exceeds the required return.E.is exactly equal to 100%.9.The possibility that more than one discount rate will make the NPV of an investm

11、ent equal to zero is called the _ problem.A.net present value profilingB.operational ambiguityC.mutually exclusive investment decisionD.issues of scaleE.multiple rates of return10.A situation in which accepting one investment prevents the acceptance of another investment is called the:A.net present

12、value profile.B.operational ambiguity decision.C.mutually exclusive investment decision.D.issues of scale problem.E.multiple choices of operations decision.11.The present value of an investments future cash flows divided by the initial cost of the investment is called the:A.net present value.B.inter

13、nal rate of return.C.average accounting return.D.profitability index.E.profile period.12.An investment is acceptable if the profitability index (PI) of the investment is:A.greater than one.B.less than one.C.greater than the internal rate of return (IRR).D.less than the net present value (NPV).E.grea

14、ter than a pre-specified rate of return.13.All else constant, the net present value of a typical investment project increases when:A.the discount rate increases.B.each cash inflow is delayed by one year.C.the initial cost of a project increases.D.the rate of return decreases.E.all cash inflows occur

15、 during the last year of a projects life instead of periodically throughout the life of the project.14.The primary reason that company projects with positive net present values are considered acceptable is that:A.they create value for the owners of the firm.B.the projects rate of return exceeds the

16、rate of inflation.C.they return the initial cash outlay within three years or less.D.the required cash inflows exceed the actual cash inflows.E.the investments cost exceeds the present value of the cash inflows.15.If a project has a net present value equal to zero, then:I. the present value of the c

17、ash inflows exceeds the initial cost of the project.II. the project produces a rate of return that just equals the rate required to accept the project.III. the project is expected to produce only the minimally required cash inflows.IV. any delay in receiving the projected cash inflows will cause the

18、 project to have a negative net present value.A.II and III onlyB.II and IV onlyC.I, II, and IV onlyD.II, III, and IV onlyE.I, II, and III only16.Net present value:A.cannot be used when deciding between two mutually exclusive projects.B.is more useful to decision makers than the internal rate of retu

19、rn when comparing different sized projects.C.is easy to explain to non-financial managers and thus is the primary method of analysis used by the lowest levels of management.D.is not an as widely used tool as payback and discounted payback.E.is very similar in its methodology to the average accountin

20、g return.17.Payback is frequently used to analyze independent projects because:A.it considers the time value of money.B.all relevant cash flows are included in the analysis.C.it is easy and quick to calculate.D.it is the most desirable of all the available analytical methods from a financial perspec

21、tive.E.it produces better decisions than those made using either NPV or IRR.18.The advantages of the payback method of project analysis include the:I. application of a discount rate to each separate cash flow.II. bias towards liquidity.III. ease of use.IV. arbitrary cutoff point.A.I and II onlyB.I a

22、nd III onlyC.II and III onlyD.II and IV onlyE.II, III, and IV only19.All else equal, the payback period for a project will decrease whenever the:A.initial cost increases.B.required return for a project increases.C.assigned discount rate decreases.D.cash inflows are moved earlier in time.E.duration o

23、f a project is lengthened.20.The discounted payback period of a project will decrease whenever the:A.discount rate applied to the project is increased.B.initial cash outlay of the project is increased.C.time period of the project is increased.D.amount of each project cash inflow is increased.E.costs

24、 of the fixed assets utilized in the project increase.21.The discounted payback rule may cause:A.some positive net present value projects to be rejected.B.the most liquid projects to be rejected in favor of less liquid projects.C.projects to be incorrectly accepted due to ignoring the time value of

25、money.D.some projects with negative net present values to be accepted.E.Both A and D.22.The internal rate of return (IRR):I. rule states that a typical investment project with an IRR that is less than the required rate should be accepted.II. is the rate generated solely by the cash flows of an inves

26、tment.III. is the rate that causes the net present value of a project to exactly equal zero.IV. can effectively be used to analyze all investment scenarios.A.I and IV onlyB.II and III onlyC.I, II, and III onlyD.II, III, and IV onlyE.I, II, III, and IV23.The internal rate of return for a project will

27、 increase if:A.the initial cost of the project can be reduced.B.the total amount of the cash inflows is reduced.C.each cash inflow is moved such that it occurs one year later than originally projected.D.the required rate of return is reduced.E.the salvage value of the project is omitted from the ana

28、lysis.24.The internal rate of return is:A.more reliable as a decision making tool than net present value whenever you are considering mutually exclusive projects.B.equivalent to the discount rate that makes the net present value equal to one.C.difficult to compute without the use of either a financi

29、al calculator or a computer.D.dependent upon the interest rates offered in the marketplace.E.a better methodology than net present value when dealing with unconventional cash flows.25.The internal rate of return tends to be:A.easier for managers to comprehend than the net present value.B.extremely a

30、ccurate even when cash flow estimates are faulty.C.ignored by most financial analysts.D.used primarily to differentiate between mutually exclusive projects.E.utilized in project analysis only when multiple net present values apply.26.You are trying to determine whether to accept project A or project

31、 B. These projects are mutually exclusive. As part of your analysis, you should compute the incremental IRR by determining:A.the internal rate of return for the cash flows of each project.B.the net present value of each project using the internal rate of return as the discount rate.C.the discount ra

32、te that equates the discounted payback periods for each project.D.the discount rate that makes the net present value of each project equal to 1.E.the internal rate of return for the differences in the cash flows of the two projects.27.Graphing the NPVs of mutually exclusive projects over different d

33、iscount rates helps demonstrate:A.how the incremental IRR varies with changes in the discount rate.B.how decisions concerning mutually exclusive projects are derived.C.how the duration of a project affects the decision as to which project to accept.D.how the payback period and the initial cash outfl

34、ow of a project are related.E.how the profitability index and the net present value are related.28.The profitability index is closely related to:A.payback.B.discounted payback.C.average accounting return.D.net present value.E.internal rate of return.29.Analysis using the profitability index:A.freque

35、ntly conflicts with the accept and reject decisions generated by the application of the net present value rule.B.is useful as a decision tool when investment funds are limited.C.cannot be used to aid capital rationing.D.utilizes the same basic variables as those used in the average accounting return

36、.E.produces results which typically are difficult to comprehend or apply.30.If you want to review a project from a benefit-cost perspective, you should use the _ method of analysis.A.net present valueB.paybackC.internal rate of returnD.average accounting returnE.profitability index31.When the presen

37、t value of the cash inflows exceeds the initial cost of a project, then the project should be:A.accepted because the internal rate of return is positive.B.accepted because the profitability index is greater than 1.C.accepted because the profitability index is negative.D.rejected because the internal

38、 rate of return is negative.E.rejected because the net present value is negative.32.Which one of the following is the best example of two mutually exclusive projects?A.planning to build a warehouse and a retail outlet side by side.B.buying sufficient equipment to manufacture both desks and chairs si

39、multaneously.C.using an empty warehouse for storage or renting it entirely out to another firm.D.using the company sales force to promote sales of both shoes and socks.E.buying both inventory and fixed assets using funds from the same bond issue.33.The Liberty Co. is considering two projects. Projec

40、t A consists of building a wholesale book outlet on lot #169 of the Englewood Retail Center. Project B consists of building a sit-down restaurant on lot #169 of the Englewood Retail Center. When trying to decide whether to build the book outlet or the restaurant, management should rely most heavily

41、on the analysis results from the _ method of analysis.A.profitability indexB.internal rate of returnC.paybackD.net present valueE.accounting rate of return34.When two projects both require the total use of the same limited economic resource, the projects are generally considered to be:A.independent.

42、B.marginally profitable.C.mutually exclusive.D.acceptable.E.internally profitable.35.Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives.Matt has been asked for his best recommendation given this information. His reco

43、mmendation should be to accept:A.project B because it has the shortest payback period.B.both projects as they both have positive net present values.C.project A and reject project B based on their net present values.D.project B and reject project A based on other criteria not mentioned in the problem

44、.E.project B and reject project A based on both the payback period and the average accounting return.36.Given that the net present value (NPV) is generally considered to be the best method of analysis, why should you still use the other methods?A.The other methods help validate whether or not the re

45、sults from the net present value analysis are reliable.B.You need to use the other methods since conventional practice dictates that you only accept projects after you have generated three accept indicators.C.You need to use other methods because the net present value method is unreliable when a pro

46、ject has unconventional cash flows.D.The internal rate of return must always indicate acceptance since this is the best method from a financial perspective.E.The discounted payback method must always be computed to determine if a project returns a positive cash flow since NPV does not measure this a

47、spect of a project.37.In actual practice, managers may use the:I. IRR because the results are easy to communicate and understand.II. payback because of its simplicity.III. net present value because it is considered by many to be the best method of analysis.A.I and II onlyB.II and III onlyC.I and III

48、 onlyD.I, II, and IIIE.None of the above38.No matter how many forms of investment analysis you do:A.the actual results from a project may vary significantly from the expected results.B.the internal rate of return will always produce the most reliable results.C.a project will never be accepted unless

49、 the payback period is met.D.the initial costs will generally vary considerably from the estimated costs.E.only the first three years of a project ever affect its final outcome.39.Which of the following methods of project analysis are biased towards short-term projects?I. internal rate of returnII.

50、net present valueIII. paybackIV. discounted paybackA.I and II onlyB.III and IV onlyC.II and III onlyD.I and IV onlyE.II and IV only40.If a project is assigned a required rate of return equal to zero, then:A.the timing of the projects cash flows has no bearing on the value of the project.B.the projec

51、t will always be accepted.C.the project will always be rejected.D.whether the project is accepted or rejected will depend on the timing of the cash flows.E.the project can never add value for the shareholders.41.You are considering a project with the following data:Internal rate of return 8.7%Profit

52、ability ratio .98Net present value -$393Payback period 2.44 yearsRequired return 9.5%Which one of the following is correct given this information?A.The discount rate used in computing the net present value must have been less than 8.7%.B.The discounted payback period will have to be less than 2.44 y

53、ears.C.The discount rate used to compute the profitability ratio was equal to the internal rate of return.D.This project should be accepted based on the profitability ratio.E.This project should be rejected based on the internal rate of return.42.Accepting positive NPV projects benefits the stockhol

54、ders because:A.it is the most easily understood valuation process.B.the present value of the expected cash flows are equal to the cost.C.the present value of the expected cash flows are greater than the cost.D.it is the most easily calculated.E.None of the above.43.Which of the following does not ch

55、aracterize NPV?A.NPV does not explicitly incorporate risk into the analysis.B.NPV incorporates all relevant cash flow information.C.NPV uses all of the projects cash flows.D.NPV discounts all future cash flows.E.Using NPV will lead to decisions that maximize shareholder wealth.44.The payback period

56、rule:A.discounts cash flows.B.ignores initial cost.C.always uses all possible cash flows in its calculation.D.Both A and C.E.None of the above.45.The payback period rule accepts all investment projects in which the payback period for the cash flows is:A.greater than one.B.greater than the cutoff poi

57、nt.C.less than the cutoff point.D.positive.E.None of the above.46.The payback period rule is a convenient and useful tool because:A.it provides a quick estimate of how rapidly the initial investment will be recouped.B.results of a short payback rule decision will be quickly seen.C.it does not have t

58、o take into account time value of money.D.All of the above.E.None of the above.47.The discounted payback period rule:A.considers the time value of money.B.discounts the cutoff point.C.ignores uncertain cash flows.D.is preferred to the NPV rule.E.None of the above.48.The payback period rule:A.determi

59、nes a cutoff point so that all projects accepted by the NPV rule will be accepted by the payback period rule.B.determines a cutoff point so that depreciation is just equal to positive cash flows in the payback year.C.requires an arbitrary choice of a cutoff point.D.varies the cutoff point with the i

60、nterest rate.E.Both A and D.49.Modified internal rate of return:A.handles the multiple IRR problem by combining cash flows until only one change in sign change remains.B.requires the use of a discount rate.C.does not require the use of a discount rate.D.Both A and B.E.Both A and C.50.A mutually excl