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EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 20P

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Please help to solve all the below :)

What is the average return per year for a project that has an initial investment of $75,000 with an average return of $12,000 per year over 10 years?

a) $1,080

b) $10,800

c) $4,500

d) $11,000

e) $3,200

Based on previous answer, what is the Return on investment (ROI) of this project?

a) 8.5

b) 6

c) 4

d) 5.5

e) 3

Which of the following best describes a cost-bound project?

a) A project that is constrained by a hard deadline in which the delivery timing is as important as the delivery itself

b) A project that is constrained by safety standards in which the safety aspect of the project is as important as the delivery itself

c) A project that is constrained by a hard budget in which the cost of the project is as important as the delivery itself

d) A and C

e) All of the above

What would be the discount factor at year 3 of a 4-year project, if the discount rate is 6%?

a) 0.78

b) 0.84

c) 0.89

d) 0.96

e) None of the above

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