Present

$120 (D) 16. $10 $100 In the Gordon model, the value of ordinary shares is the (A) present value of a constant, growing dividend stream. (B) actual amount each ordinary shareholder would expect to receive if the firm 's assets are sold, creditors and preference shareholders are repaid, and any remaining money is divided among the ordinary shareholders. (C) present value of a non-growing dividend stream. (D) net value of all assets which are liquidated for their

assumes that inflow are reinvested at 80 percent of the internal rate of return This is a correct answer It is the difference in the reinvestment assumptions that can be significant in determining when to use the present value or internal rate of return methods. Under the net present value method, cash flows are assumed to be reinvested at the firm 's weighted average cost of capital Points earned on this question: 1 Question 2 (Worth 1 points) A project has initial costs of $3,000 and

Fin 3320 Practice Questions1 – Total Course 1. Your wealthy uncle has set up a special account that will give you $500,000 on your 35th birthday. Assuming you are age 21 (thus 14 years from receiving this), what is the present value of this gift if the appropriate discount rate is 8.0%? (Ch5) a. $170,231 b. $282,449 c. $442,619 d. $191,206 e. $734,664 2. You need $10,900 for the down payment on a new car. You presently have $5,000 in savings for which you expect to earn 6% (annual rate, compounded

Papa Geo’s – Restaurant Budget Proposal For 2012 - 2017 BUSN-278 [Term] Professor[name] DeVry University ------------------------------------------------- Table of Contents Section | Title | Subsection | Title | Page Number | 1.0 | Executive summary | | | | 2.0 | Sales Forecast | | | | | | 2.1 | Sales Forecast | | | | 2.2 | Methods and Assumptions | | 3.0 | Capital Expenditure Budget | | | | 4.0 | Investment Analysis | | | | | | 4.1 | Cash flows

Methods of the feasibility study. Net present value We will determine the viability of the investment using the Net present value method. It will also help to estimate the costs that will be incurred in the future and the benefits that business will get. We choose this method because it shows actual benefits and takes into consideration time value of money ( Baker and Powell, 2000) PV = FV/ (1+r) n PV- present value, FV- future value in n periods, r-expected rate of return. Cost /benefit Analysis

Question 1 2 out of 2 points | | | Assume that the economy is in a mild recession, and as a result interest rates and money costs generally are relatively low. The WACC for two mutually exclusive projects that are being considered is 8%. Project S has an IRR of 20% while Project L 's IRR is 15%. The projects have the same NPV at the 8% current WACC. However, you believe that the economy is about to recover, and money costs and thus your WACC will also increase. You also think that the projects

Washington State University Finance 325 Practice Problems 1. What is the net present value of a project with the following cash flows and a required return of 12 percent? Year 0 1 2 3 Cash Flow -$28,900 $12,450 $19,630 $ 2,750 2. What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 11.5 percent. Year 1 2 3 4 Cash Inflows $4,375 $ 0 $8,750 $4,100 3. A project will produce cash inflows of $1,750

initial investment.        B) present value of cash flows by the initial investment.        C) initial investment by the total cash flows.        D) initial investment by the present value of cash flows. 18. To avoid rejecting projects that actually should be accepted,        1. intangible benefits should be ignored.        2. conservative estimates of the intangible benefits’ value should be incorporated into    the NPV calculation.        3. calculate net present value ignoring intangible

two years and then there are net positive cash flows for the subsequent ten years. A net present value calculation will be used in order to determine if the company should undertake this project or not. The present value calculations will be done according to this formula: INCLUDEPICTURE "http://i.investopedia.com/inv/dictionary/terms/NPV.gif" * MERGEFORMATINET Source: Investopedia (2012) The present value of the costs is as follows: Year 1 2 Cash Flow -25 -28 PV -23.1481 -24.0055

Chapter 6 | Capacity Planning | | TRUE/FALSE 1. Capacity is the maximum rate of output of a process. Answer: True Reference: Introduction Difficulty: Easy Keywords: capacity, maximum output rate 2. Capacity decisions should be made separate from strategic decisions. Answer: False Reference: Introduction Difficulty: Moderate Keywords: capacity decision, strategic decisions 3. Capacity can be expressed by output or input measures