Corporate Finance Quiz
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)
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
4. We should accept projects if:
NPV > 0
NPV < 0
NPV > 1
NPV < 1
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.
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