100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
BFIN 300 - FINAL EXAM 2024 Exam Questions With Solutions $18.49   Add to cart

Exam (elaborations)

BFIN 300 - FINAL EXAM 2024 Exam Questions With Solutions

 4 views  0 purchase
  • Course
  • BFIN300
  • Institution
  • BFIN300

BFIN 300 - FINAL EXAM 2024 Exam Questions With Solutions What is payback period rule? The length of time it takes for a project to return to its initial investment Based on the payback period rule, when is a project acceptable? If its calculated payback is less than the prespecificed number...

[Show more]

Preview 3 out of 25  pages

  • October 13, 2024
  • 25
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • BFIN300
  • BFIN300
avatar-seller
UpperClass
BFIN 300 - FINAL EXAM 2024 Exam
Questions With Solutions

What is payback period rule? The length of time it takes for a project to return to its initial

investment




Based on the payback period rule, when is a project acceptable? If its calculated payback

is less than the prespecificed number ex; two years




What is discounted payback period rule? The length of time its takes for a project's

discounted cash flows to equal its initial investment




True or False; As long as the cash flows & discount rate are positive, the discounted payback

period will never be smaller than the payback period True, because the discounting

reduces the value of the cash flow




What is the best alternative to the NPV method? Internal rate of return (IRR)




What is Internal rate of return (IRR)? - The discount rate at which the net present value of

an investment is zero. It is a method of evaluation capital

, BFIN 300 - FINAL EXAM 2024 Exam
Questions With Solutions
- expenditure proposals

The interest rate that causes the NPV of the project to be zero




What is the general rule for using the IRR? Accept the project if the IRR is greater than

the discount rate. Reject the project if the IRR is less than the discount rate.




What is profitability index? The ratio of the present value of the future expected cash

flows after initial investment divided by the initial investment




What are relevant cash flows? - The cash inflows and outflows directly associated with a

particular decision or project

- A change in the firm's future cash flow that comes about a direct effect of the decision to that

that project




What are incremental cash flows? The difference between the cash flows of a firm with a

project and the cash flows of a firm without a project




In calculating the NPV of a project, what cash flows should be used? Incremental cash

flows

, BFIN 300 - FINAL EXAM 2024 Exam
Questions With Solutions

What does standalone basis mean? Analyzing a project without considering its

interactions with other activities or entities




What is a sunk cost? A cost that has already occurred and cannot be reversed, such costs

should be ignored when deciding whether to accept or reject a project




Why should sunk costs be ignored? They cannot be changed by a decision to accept or

reject a project




Are sunk costs incremental cash flows? No




What is an opportunity cost? -By taking a project a firm is foregoing other opportunities

for using the assets

- The most valuable alternative that is given up. The discount rate used in NPV computation is an

opportunity interest rate




Is an opportunity cost an incremental cash flow? No

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller UpperClass. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $18.49. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

64438 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$18.49
  • (0)
  Add to cart