Need help with corporate investment and finance questions

Oct 20th, 2015
Sigchi4life
Category:
Business & Finance
Price: $5 USD

Question description

1.  True --False Risky projects can be evaluated by discounting the expected cash flows at a risk-adjusted discount rate. 

2.  True --False Risky projects should be evaluated by discounting nominal cash flows at real interest rates. 

3.  True --False Post audits are conducted before the start of the projects. 

4.  True --False Most firms keep track of the progress of projects by conducting post audits shortly after the projects have begun to operate. 

5.  True --False Projects with high fixed operating costs have lower break-even points. 

6.  True --False The break-even point in terms of NPV is usually lower than the income break-even point.. 

7.  True --False Firms that use income break-even are really ignoring at least the opportunity cost of capital on their investments. 

8.  True --False Monte Carlo simulation is a tool where the computer establishes the probabilities for each of the value driving variables. 

9.  True --False In constructing a simulation model of an investment project, one can ignore possible interdependencies between variables. 

10.  True --False Monte Carlo simulation can be used to get the distribution of NPV values for a project. 

11.  True --False Tangible assets usually have higher abandonment value than intangible ones. 

12.  True --False The abandonment option is a call option, while the option to expand is a put option. 

13.   True --False In using a decision tree, you should work backwards eliminating less viable options. 


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