Feedback Module four graded quiz - This quiz contributes 10% towards your final grade - Due 29th JuneHelp CenterYou submitted this quiz onTue 7 Jul 2015 8:47 AM PDT. You got a score of10.00out of10.00. However, you will not get credit for it, since it was submitted past the deadline.Top of FormThis quiz contributes 10% towards your final grade for this course.There are 10 questions - Attempt all questions.You can attempt this quiz two (2) times only. The highest score will be used towards your final grade.Ensure you have watched all the lecture videos, done the practice quiz and other learning activities forModule 4BEFORE doing this quiz.Question 1Which of the following does the discount rate r (eg: 4% p.a.) NOT account for?Your AnswerScoreExplanation

opportunity cost

expected inflation

risk-free interest rate

the expected value of the cash flowCorrect1.00

Total1.00 / 1.00

Question 2If I invest $600 today at an annual interest rate of 5% p.a. after 8 years my investment will be worth more than $850Your AnswerScoreExplanation

False

TrueCorrect1.00Correct

Total1.00 / 1.00

Question 3The quality of an analysts earnings forecast does NOT depend on which of the following:Your AnswerScoreExplanation

The analysts interpretation of environmental information (eg: macroeconomic news)

Unexpected future events that are unpredictable in natureCorrect1.00Correct

The quality of the analysts financial model

The analysts interpretation of historical information

Total1.00 / 1.00

Question 4At which of the following discount rates would the following investment break even:Initial cost of $11,000, cash flows of $6,000 for two yearsYour AnswerScoreExplanation

4%

5%

6%Correct1.00Correct

7%

Total1.00 / 1.00

Question 5According to NPV analysis, should the following project be undertaken?Initial gain of $10,500; negative cash flows of $6,000 for two years with a 8% p.a. discount rateYour AnswerScoreExplanation

Yes

NoCorrect1.00Correct

We are indifferent (NPV = $0)

We do not have enough information

Total1.00 / 1.00

Question 6At which of the following discount rates would the following investment break even:Initial cost of $3,000, cash flows of $1,682.5 for 2 yearsYour AnswerScoreExplanation

6% p.a.

7% p.a.

8% p.a.Correct1.00Correct

9% p.a.

Total1.00 / 1.00

Question 7Calculate the NPV of a project with an initial cost of $1,000,000;andpositive cash flows of $300,000 for the next 5 years with a 10% p.a. discount rate:Your AnswerScoreExplanation

$500,000

$97,579

$327,343

$137,236Correct1.00Correct

Total1.00 / 1.00

Question 8Calculate the NPV of a project that has no initial cost ($0) however will provide the following cash flows with a discount rate of 8% p.a.Yr1: $4,000Yr2: -$3,000Yr3: $80,000Your AnswerScoreExplanation

$61,699

$56,743

$64,638Correct1.00Correct

$81,000

Total1.00 / 1.00

Question 9If a firm is considering 2 independent investment proposals (Investment A: NPV $4,000 & Investment B: NPV $2,500) is it correct to say the firm should invest in A instead of investing in B.Your AnswerScoreExplanation

True

FalseCorrect1.00Correct

Total1.00 / 1.00

Question 10Calculate the NPV of a project that has an initial cost of $10,000 and three years of positive $3,000 cash flows with a discount rate of 0% p.a.Your AnswerScoreExplanation

-$1,000Correct1.00Correct

-$436

We cannot calculate this with the information given

$1,563

Total1.00 / 1.00

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