兹维博迪金融学第二版试题库6TB
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6-1 Chapter Six
The Analysis of Investment Projects
This chapter contains 41 multiple choice problems, 20 short problems and 8 longer
problems.
Multiple Choice
1. The objective of a firm's management is to only undertake the projects that ________ the
market value of shareholders' equity.
a) decrease
b) do not decrease
c) change
d) do not change
Answer: (b)
2. The decision rule that management uses with the net present value is to undertake only those
projects with ________ NPV.
a) a discounted
b) a contingent
c) a positive
d) negative
Answer: (c)
3. If a firm decides to invest in automated machines that will allow the firm to reduce labor
costs, this is an example of a ________ capital expenditures project.
a) new products
b) replacement of existing assets
c) cost reduction
d) advertising
Answer: (c)
4. The NPV of a project represents the amount by which it is expected to increase ________.
a) the break-even point
b) capital budgeting
c) capital expenditures
d) shareholder wealth
Answer: (d)
6-2
5. Consider the following annual cash flows:
Year Cash Flows (in thousands of dollars)
0 –2,000
1 1,200
2 1,500
3 1,800
Using a cost of capital of 15%, compute this project's NPV.
a) $5,361,000
b) $3,548,000
c) $3,361,000
d) $1,361,000
Answer: (d)
6. Consider the following annual cash flows:
Year Cash Flows (in thousands of dollars)
0 –5,000
1 4,100
2 3,800
3 3,500
Using a cost of capital of 12%, compute this project's NPV.
a) $14,181,000
b) $9,181,000
c) $4,181,000
d) $3,548,000
Answer: (c)
7. A negative sign in front of a cash-flow forecast for a particular year means that it is an
________.
a) inflow
b) outflow
c) indeterminate flow
d) more information is required to make this determination
Answer: (b)
6-3 8. Net cash inflows from operations can be computed in which of the following ways?
a) Cash Flow = Revenue – Cash Expenses – Taxes
b) Cash Flow = Net Income + Noncash Expenses
c) Cash Flow = Revenue – Total Expenses – Taxes + Noncash Expenses
d) all of the above
Answer: (d)
9. Consider the development of a new type of laptop machine. In your estimates you determine
that you will sell 5,000 laptop units per year at a price of $2,500 per laptop. Production
equipment will have to be purchased at a cost of $2 million. The equipment will be
depreciated over five years using the straight-line method. Net working capital of $1.9
million will also required to finance this project. The cash expenses for this project are $1,700
per laptop. The tax rate is 40%. Compute the net cash inflows from operations.
a) $4 million
b) $2.56 million
c) $2.16 million
d) $1.76 million
Answer: (b)
10. Refer to question 9. What is the annual depreciation amount for this project?
a) $4 million
b) $1 million
c) $0.78 million
d) $0.4 million
Answer: (d)
11. Refer to question 9. If we use a cost of capital equal to 13%, what is the NPV for this project?
a) $2.3 million
b) $3.7 million
c) $5.1 million
d) $9 million
Answer: (c)
6-4 12. In computing a project's cost of capital the risk to use is ________.
a) the risk of the financing instruments used to fund the project
b) the risk of the project's cash flows
c) a risk-free rate
d) a historical risk rate using T-bills
Answer: (b)
13. A capital budgeting project's cost of capital should reflect only the ________ risk of the
project, not the project's ________ risk.
a) unsystematic, systematic
b) unsystematic, market-related
c) systematic, unsystematic
d) systematic, market-related
Answer: (c)
14. The point of indifference between accepting and rejecting a project is referred to as the
________ point.
a) payback
b) NPV
c) rejection
d) break-even
Answer: (d)
15. Consider a project that has total fixed costs of $400,000, an annual depreciation (based on the
straight-line method) of $150,000, annual cash flows of $255,000, and a tax rate of 34%. The
difference between the revenue and variable cost (on a per unit basis) is $1,600 (so we use
1,600Q). Determine the break-even volume for this project.
a) Q = 443 units
b) Q = 349 units
c) Q = 230 units
d) Q = 194 units
Answer: (b)
