Finance

Which of the following best describes the financial loss involved in choosing a less profitable option?

Terminal Loss

Opportunity Cost

Marginal Cost

Which of the following is considered a relevant cost when undertaking an investment analysis?

Opportunity Cost

Sunk cost

Standard Costs

An investment decision can also be assessed on the basis of the Triple Bottom Line accounting. In this methodology managers

Are responsible for accounting results, cash flow performance and balance sheet impact

Assess a project on the basis of what is referred to as People, Plant and Profit impact

Determine the profit potential utilizing zero cost of capital, weighted average cost of capital and real cost of capital

A large cable television provider is considering getting in to the high end ice cream business. Which of the following questions is most relevant to evaluating this proposal?

How long will the project last and what are its key stages?

How much financing is required and what is the cash flow pattern?

Does the project align with the overall objectives of the company?

What is an advantage of the payback method?

It considers the hurdle rate.

It considers all relevant cash flows.

It considers the wealth of shareholders of the business.

It is quick and easy to calculate.

Stage 2 of the Investment Decision Making Process would include adopting a systematic approach

True

False

Stage 3 of the Investment Decision Making Process would include converting promising ideas into full blown proposals

True

False

The Process of Investment Decision Making includes only these steps: Stage 1: Determine Investment Funds Available Stage 2: Approve the Project(s) Stage 3: Monitor and Controlthe Project(s)

True

False

Non-Diversifiable Risk can be affected by the rate of inflation, interest rates and exchange rates.

True

False

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