Quiz Ch 05 – Characteristics of the Payback Period Rule
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What defines the payback period rule?
What defines the payback period rule?
Clayton deposited $2,500 into an account that pays 5 percent interest, compounded annually, and plans to withdraw his interest earnings immediately. Jayda deposited $2,500 at 5 percent interest, compounded annually, and will reinvest her interest earnings. Who will earn more interest in Year 1?
Sophia and Mallory are the same age. Sophia invests $6,000 at 7 percent, compounded annually, at age 25, while Mallory invests the same amount at the same interest rate, compounded annually, at age 30. Who will have more money when they both reach age 60, assuming all else is constant?
Under what circumstances will a project have only one internal rate of return?
Given three independent projects within project X with NPVs of + $70, -$40, and + $100 for A, B, and C, how would you decide whether to accept or reject the entire project?
What does the benefit-cost ratio represent?
What does the profitability index represent?
What is the definition of the Internal Rate of Return (IRR)?
What factors influence the net present value of a project?
What is the likely number of Internal Rate of Returns (IRRs) for the project if the cash flow sign for a project changes two times?