Quiz Ch 08 – Project Cost, Profitability Index, and NPV
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What can be concluded when a project has a cost of $50,000 and a profitability index of 0.45?
What can be concluded when a project has a cost of $50,000 and a profitability index of 0.45?
In straightforward situations with hard capital rationing, projects can be assessed using:
What action should be taken for a project when its IRR is lower than the opportunity cost of capital?
What can be inferred if the net present value of a project is $5,000 at a 10% discount rate and the project costs $20,000?
How would you characterize projects that occasionally have positive initial cash flows?
What does it indicate when a project’s internal rate of return matches its opportunity cost of capital?
When assessing projects, the internal rate of return is most dependable in which scenario?
What rate of increase in NPV is required over the course of one year to justify the postponement of a project?
What investment criteria concept might lead an investor to choose Project B over other projects?
Which machine should be selected when faced with a choice between two machines producing the same product but having varying lifespans?