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Introduction to Finance - Milestone 4 Exam Questions With 100% Verified Answers

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©BRAINBARTER 2024/2025 Introduction to Finance - Milestone 4 Exam Questions With 100% Verified Answers What is one advantage of NPV as a capital budget method? It is equally accurate whether cash flows are known or estimated. It is flexible, in the sense that the discount rate can be adjusted...

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  • September 29, 2024
  • 11
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • Finance
  • Finance
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Introduction to Finance - Milestone 4 Exam
Questions With 100% Verified Answers


What is one advantage of NPV as a capital budget method?




It is equally accurate whether cash flows are known or estimated.

It is flexible, in the sense that the discount rate can be adjusted to account for factors like risk.

Cash flows and the discount rate are easy to accurately determine.


It accounts fully for opportunity costs. - answer✔It is flexible, in the sense that the discount rate

can be adjusted to account for factors like risk.

Which of the following describes derivatives, rather than debt securities or equity securities?




They are the least risky of the three.

They are considered a liquid investment.

They are a fixed-term security.


They are often used to offset external risks like changes in commodity pricing. - answer✔They

are often used to offset external risks like changes in commodity pricing.

, ©BRAINBARTER 2024/2025


What can a business that has too little working capital do to increase it?




Decrease inventory

Increase cash on hand

Reduce current assets


Increase short-term liabilities - answer✔Increase cash on hand


Seed money is a type of financing appropriate for a company in what stage of development?




Decline

Maturity

Growth


Introduction - answer✔Introduction


An electronics company is preparing a capital budget and considering four long-term

investments. The payback period of each project is as follows:




Project A: 4 years

Project B: 5.2 years

Project C: 2.4 years

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