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FMP IFMA Chapter 4 Quiz - Finance and Business Questions and answers latest update
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FMP IFMA Chapter 4 Quiz - Finance and Business Questions and answers latest update
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FMP IFMA Chapter 4 Quiz - Finance andBusiness
In conjunction with a high financial hurdle, an organization has set one year as a screen to discourage
single capital projects unless they have potential for significant returns. What investment analysis
technique could provide the appropriate justification in this scenario?
A. Net present value (NPV)
B. Life-cycle cost analysis
C. Internal rate of return (IRR)
D. Payback method
D. Payback method
When considering two mutually exclusive projects, an organization adopted a payback period (PP)
decision rule to accept the shorter payback period (PP) if it is 2.5 years or less. If Project A has a payback
of 2.6 years and Project B has a payback of 3 years, which project(s) would be accepted?
A. Accept Project B
B. Accept Project A
C. Accept both
D. Accept neither
D. Accept neither
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What differentiates the net present value (NPV) and the internal rate of return (IRR) methods?
A. Net present value (NPV) results in a monetary value; internal rate of return (IRR) yields a percentage.
B. Net present value (NPV) considers the initial cash investment; internal rate of return (IRR) examines
cash flows after the initial investment.
C. Net present value (NPV) examines cash flows after the initial investment; internal rate of return (IRR)
considers the initial cash investment.
D. Net present value (NPV) yields a percentage; internal rate of return (IRR) results in a monetary value.
A. Net present value (NPV) results in a monetary value; internal rate of return (IRR) yields a percentage.
What processes helps to ensure that planning decisions are based on best practices, objective external
comparisons, and facts when quantifying costs and benefits for a capital investment?
A. Life-cycle costing
B. Apportionment
C. Benchmarking
D. Capital rationing
C. Benchmarking
According to the time value of money principles, what statement about a $100,000 USD investment with
the potential for an annual 6% return is correct?
A. Due to inflation, it is impossible to anticipate the worth of the investment over time.
B. The opportunity cost is $6,000 USD.
C. After one year the investment will be worth $106,000 USD.
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