FM

Your aunt has promised to give you $5,000 when you graduate from college. You expect to graduate three years from now. If you speed up your plans to enable you to graduate two years from now, the present value of the promised gift will:

Increase

which of the following are advantages of the payback method of project analysis

Liquidity, bias, ease of use

If a firm accepts Project X it will not be feasible to also accept Project Z because both projects would require the simultaneous and exclusive use of the same piece of machinery. These projects are considered to be:

Mutually exclusive

the interest earned on both the initial principle and the interest reinvested from prior periods is called

Compound interest

which one of the following will decrease the net present value of a project

increasing the projects initial cost a time 0

which of the following methods predicts the amount of money by which the values of a firm will change if a project is accepted

net present value

which one of the following statements related to the internal rate of return(IRR) is correct

the IRR is equal to the required return when the net present value is equal to zero

which one of the statements is true

the present value of a growing perpetuity will decrease if the rate is increased

Javangula Foods is considering two mutually exclusive projects and has determined that the crossover rate for these projects is 12.3 percent. Given this information, you know that:

the project that is acceptable at a discounted rate of 12 percent should be rejected at a discounted rate of 13 percent

which one of the following statements correctly defined a time value of money relationship

time and present value are inversely related, all else held constant

Nirav just opened a savings account paying 2 percent interest, compounded annually. After four years, the savings account will be worth $5,000. Assume there are no additional deposits or withdrawals. Given this information, Nirav:

could have deposited less money today and still had 5,000 in four years if the account paid sa higher rate of interest