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Calculating the payback period for a capital project requires knowing which of the following? a. Useful life of the project b. The company's minimum required rate of return c. The project's NPV

Calculating the payback period for a capital project requires knowing which of the following? a. Useful life of the project b. The company's minimum required rate of return c. The project's NPV

Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 7MC: Calculate the project cash flows for each year. Based on these cash flows and the average project...
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Answer the following:
 
1. Calculating the payback period for a capital project requires knowing which of the following?
a. Useful life of the project
b. The company's minimum required rate of return
c. The project's NPV
d. The project's annual cash flow
 
2. The payback criterion for capital investment decisions
a. is conceptually superior to the IRR criterion
b. takes into consideration the time value of money
c. gives priority to rapid recovery of cash
d. emphasizes the most profitable projects
 
3. What is an investor’s objective in financial statement analysis?
a. To determine if the firm is risky
b. To determine the stability of earnings.
c. To determine changes necessary to improve future performance
d. To determine whether or not an investment is warranted by estimating a company’s future earnings stream
 
4. The current ratio is
a. calculated by dividing current liabilities by current assets.
b. used to evaluate a company's liquidity and short-term debt paying ability
c. used to evaluate a company's solvency and long-term debt paying ability.
d. calculated by subtracting current liabilities from current assets.
 
5. Which one of the following is not a characteristic generally evaluated in analyzing financial statements?
a. Liquidity
b. Profitability
c. Solvency
d. Marketability
 
6. What is the most widely used liquidity ratio?
a. Quick ratio
b. Inventory turnover
c. Current ratio
d. Debt ratio
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