Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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1.
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Which
of the following would not be classed as a capital investment project? a. | An investment in
a completely new business venture | c. | Investment in a new credit control
system | b. | Investment in a new stock
warehouse | d. | Purchase of a
new office block by a property company for immediate sale | | | | |
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2.
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A
project has a capital outlay of 100 and operating cash flows of 20,30,40,30 in the following four
years followed by the scrap value of the plant less decomissioning costs of 10. The discount
rate is 8 per cent. What is the net present value of the project. a. | 4.85 | c. | 62.49 | b. | 4.49 | d. | 104.85 | | | | |
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3.
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A
project has a capital outlay of 60 and operating cash flows of -20,40,40,40 in the following four
years followed by the scrap value of the plant less decomissioning costs of -10. The discount
rate is 8 per cent. What is the net present value of the project. a. | 9.37 | c. | 70.12 | b. | 10.12 | d. | 8.64 | | | | |
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4.
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A
project has a capital outlay of 100 and operating cash flows of 20,30,40,30 in the following four
years followed by the scrap value of the plant less decomissioning costs of 10. The discount
rate is 8 per cent. What is the internal rate of return of the project. a. | 8 per
cent | c. | 4.85 per
cent | b. | 9.89 per
cent | d. | 30 per
cent | | | | |
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5.
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A
project has a capital outlay of 60 and operating cash flows of -20,40,40,40 in the following four
years followed by the scrap value of the plant less decomissioning costs of -10. The discount
rate is 8 per cent. What is the net present value of the project. a. | 14.44 per
cent | c. | 8 per
cent | b. | 50 per
cent | d. | 13.26 per
cent | | | | |
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