Feedback Module four graded quiz - This quiz contributes 10% towards your final grade - Due 29th

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You submitted this quiz on Tue 7 Jul 2015 8:47 AM PDT. You got a score of 10.00 out of 10.00. However, you will not get credit for
it, since it was submitted past the deadline.

This 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 for Module 4 BEFORE doing
this quiz.

Question 1
Which of the following does the discount rate r (eg: 4% p.a.) NOT account for?

Your Answer

Score

opportunity cost

expected inflation

risk-free interest rate

the expected value of the cash flow

Correct

1.00

Explanation

Total

1.00 / 1.00

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

Your Answer

Score

Explanation

1.00

Correct

False

True

Correct

Total

1.00 / 1.00

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

Your Answer

Score

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

Unexpected future events that are unpredictable in nature

Correct

1.00

The quality of the analysts financial model

The analysts interpretation of historical information

Total

1.00 / 1.00

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

Your Answer

Score

Explanation

1.00

Correct

4%

5%

6%

7%

Correct

Total

1.00 / 1.00

Question 5
According 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 rate

Your Answer

Score

Explanation

1.00

Correct

Yes

No

Correct

We are indifferent (NPV = $0)

We do not have enough information

Total

Question 6
At 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 years

1.00 / 1.00

Your Answer

Score

Explanation

1.00

Correct

6% p.a.

7% p.a.

8% p.a.

Correct

9% p.a.

Total

1.00 / 1.00

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

Your Answer

$500,000

$97,579

Score

Explanation

$327,343

$137,236

Correct

Total

1.00

Correct

1.00 / 1.00

Question 8
Calculate 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: $4,000
Yr2: -$3,000
Yr3: $80,000

Your Answer

Score

Explanation

1.00

Correct

$61,699

$56,743

$64,638

Correct

$81,000

Total

1.00 / 1.00

Question 9
If 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 Answer

Score

Explanation

1.00

Correct

True

False

Total

Correct

1.00 / 1.00

Question 10
Calculate 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 Answer

-$1,000

Correct

Score

Explan

1.00

Correct

-$436

We cannot calculate this with the information given

$1,563

Total

1.00 / 1.00