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K2 Long-term decision making

Written by Saad Rahman (ACCA)

8 سوالات: اے سی سی اے نالج لیول میں نیا، جوابات اور وضاحت کے ساتھ۔

جوابی کنجی کے ساتھ قابلِ پرنٹ ورک شیٹ

تمام سوالات جوابات کے ساتھ
  1. An investment of $200,000 returns $80,000 a year for 4 years. The cost of capital is 12 percent. What is the NPV to the nearest dollar?

    • 1 $120,000
    • 2 $80,000
    • 3 -$42,988
    • 4 $42,988
    جواب دیکھیں

    درست جواب: $42,988

    The annuity factor is 3.0373, so the present value is $242,988 and the NPV is $42,988.

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  2. An investment of $200,000 returns $80,000 a year. What is the payback period?

    • 1 2.5 years
    • 2 0.4 years
    • 3 4 years
    • 4 2 years
    جواب دیکھیں

    درست جواب: 2.5 years

    200,000 / 80,000 = 2.5 years.

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  3. NPV at 20 percent is $7,099 and at 25 percent it is -$11,072. What is the approximate IRR using interpolation?

    • 1 22.5%
    • 2 25.0%
    • 3 22.0%
    • 4 20.0%
    جواب دیکھیں

    درست جواب: 22.0%

    IRR = 20 + (7,099 / (7,099 + 11,072)) x 5 = 22.0 percent.

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  4. A nominal rate of 12 percent compounded monthly gives an effective annual rate of:

    • 1 13.00%
    • 2 12.00%
    • 3 12.68%
    • 4 1.00%
    جواب دیکھیں

    درست جواب: 12.68%

    (1 + 0.12/12) to the power 12, minus 1.

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  5. A project's total profit over 4 years is $120,000, an average of $30,000 a year, on an initial investment of $200,000. What is the ROCE based on the initial investment?

    • 1 60%
    • 2 30%
    • 3 25%
    • 4 15%
    جواب دیکھیں

    درست جواب: 15%

    30,000 / 200,000 = 15 percent.

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  6. What is a limitation of the payback method?

    • 1 It always rejects good projects
    • 2 It ignores cash flows after the payback period
    • 3 It cannot be calculated
    • 4 It uses accounting profit
    جواب دیکھیں

    درست جواب: It ignores cash flows after the payback period

    A project could have large cash flows after payback that are ignored.

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  7. What does a positive NPV mean?

    • 1 The payback is less than a year
    • 2 The project is not worth doing
    • 3 The IRR is lower than the cost of capital
    • 4 The project is expected to increase wealth at the required rate of return
    جواب دیکھیں

    درست جواب: The project is expected to increase wealth at the required rate of return

    A positive NPV means the return is higher than the discount rate.

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  8. What is the present value of $10,000 received in 3 years at a discount rate of 8 percent?

    • 1 $7,938
    • 2 $7,600
    • 3 $12,597
    • 4 $8,000
    جواب دیکھیں

    درست جواب: $7,938

    10,000 / 1.08 cubed = 7,938.

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