Corporate Finance Quiz

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Corporate Finance Quiz

Test your knowledge of corporate finance concepts with our comprehensive quiz. Designed for both students and professionals, this quiz covers essential investment appraisal techniques and financial decision-making.

You'll encounter questions about:

Investment appraisal methods
Payback period advantages
Net Present Value (NPV) rules
Internal Rate of Return (IRR)

10 Questions2 MinutesCreated by InvestingWizard101

1. Investment appraisal techniques are:

Discounted and simple

Discounted and non-discounted

Non-discounted and simple

Simplex and complex

An advantage of payback method is:

Computational simplicity

Arbitrary cutoff period

Not leading to value maximizing decisions

Not accounting properly for risk

Average profits after taxes is equal to:

Average annual operating cash inflows + average annual depreciation

Average annual operating cash inflows / average annual depreciation

Average annual operating cash inflows * average annual depreciation

Average annual operating cash inflows - average annual depreciation

A key benefit of using NPV as decision rule is:

It doesn’t capture managerial flexibility (option value) well.

It lacks the intuitive appeal of payback.

It can not properly account for risk differences between projects

It focuses on cash flows, not accounting earnings

If Internal rate of return is greater than the cost of capital:

We reject the project

We don´t have enough information

Neither accept nor reject the Project

Accept the Project

A investment appraisal should:

Account for the time value of money

Account for risk

Focus on cash Flow

All the anwers are correct.

A non-discounted technique of investment appraisal is:

Discounted payback period.

Accounting Rate Of Return.

Profitability Index

Net present value

If the project’s payback period is less than the maximum acceptable payback period, we have to:

Reject the project

All answers are correct

Accept the project

It is indifferent.

The payback period can be defined as:

The amount of money required for the firm to recover its initial investment

The amount of time required for the firm to recover its initial investment.

The amout of interest rate required for the firm to recover its initial investment.

None of the above definitions.

Corporate Finance Quiz

Corporate Finance Quiz

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