Quiz Ch 09 – Enhancing Project NPV with a Positive Discount Rate
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What modification would raise the NPV of a project when a positive discount rate is applied?
What modification would raise the NPV of a project when a positive discount rate is applied?
What is the primary rationale for excluding sunk costs from capital budgeting decisions?
Which is least likely to influence the decision to pursue an investment?
What factor would cause a reduction in the net present value of a project involving the introduction of a new product that necessitates an investment in new machinery?
Which factor is the least likely to significantly affect the opportunity cost of an asset?
When calculating cash flow, what should the company do with the depreciation tax shield for an investment of $120,000 that can be depreciated for tax purposes straight-line over 6 years at a corporate tax rate of 21%?
When encountering projects with negative NPVs, what action should be taken?
What is the preferred approach to evaluate capital budgeting proposals concerning the project’s financing?
Which option represents a negative indirect effect in the context of new projects or products?
Which represents a positive indirect effect when evaluating new projects?