Quiz Ch 02 – Opportunity Cost of Capital for a Risky Project
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What is the opportunity cost of capital for a risky project?
What is the opportunity cost of capital for a risky project?
What is the present value formula for a cash flow expected one period from now?
True or false: An annuity is clarified as making fixed periodic payments over a defined duration.
True or false: Comparing the value of dollars, a safe dollar is consistently lower than a risky dollar, given the typically lower return on safe investments and the higher return on risky investments.
True or false: The equal-payment home mortgage exemplifies an annuity.
True or false: The terms rate of return, discount rate, hurdle rate, and opportunity cost of capital are interchangeable.
True or false: The value of a five-year annuity is the sum of two perpetuities, each commencing payments in different years.
True or false: The investment rule suggests prioritizing investments with returns that surpass their opportunity costs.
True or false: In equal-payment mortgage amortization, the interest portion increases while the loan reduction portion decreases over time.
True or false: The net present value of a project is found by subtracting the present value of its required investment from the present value of its future cash flows.