Quiz Ch 05 – Payback Period Rule and Acceptance Criteria
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What is the acceptance criterion for projects under the payback period rule?
What is the acceptance criterion for projects under the payback period rule?
If Caroline will receive an award of $20,000 in six years, and Jiexin will receive an award of $20,000 in nine years, which statement is true if both apply a discount rate of 7 percent?
If your aunt has promised to give you $5,000 upon your college graduation in three years and you speed up your plans to graduate in two years, what will happen to the present value of the gift?
Assuming all other variables remain constant, which option will result in the smallest present value for a lump sum?
What variable represents the exponent in the present value formula?
What is the most efficient method for computing the internal rate of return (IRR) of a project?
To achieve a retirement goal of $2 million with a one-time lump-sum deposit, in which scenario can you deposit a smaller amount today: if you plan to retire sooner rather than later and earn a low or high rate of interest?
If $6,000 is deposited into a retirement savings account with an 8 percent annual interest rate compounded annually and no withdrawals will be made until retirement in 48 years, which statement is true?
True or false: Expenses related to decommissioning and clean-up in a project are commonly considered insignificant and can usually be disregarded.
True or false: Accounting earnings obtained from a company’s income statement, following generally accepted accounting principles (GAAP), are typically the most appropriate data for determining a project’s NPV.