Final Exam Review Part 2
Final Exam Review Part 2
Final Exam Review Part 2
1. You have four projects from which to choose one. Project A is being done over a six-
year period and has a net present value (NPV) of $70,000. Project B is being done
over a three-year period and has an NPV of $30,000. Project C is being done over a
five-year period and has an NPV of $40,000. Project D is being done over a one-year
period and has an NPV of $60,000. Which project would you choose?
A. Project A C. Project C
B. Project B D. Project D
2. Project A has an internal rate of return (IRR) of 21 percent. Project B has an IRR of 7
percent. Project C has an IRR of 31 percent. Project D has an IRR of 19 percent.
Which of these would be the BEST project?
A. Project A C. Project C
B. Project B D. Project D
3. As a project manager, you are presented with the following information on the net
present value (NPV) of several potential projects. Which project is your BEST
choice?
A. Project A with an NPV of $95,000
B. Project B with an NPV of $120,000
C. Project C with an NPV of $20,000
D. Project D with an NPV of -$30,000
4. Your company can accept one of three possible projects. Project A has a net present
value (NPV) of $30,000 and will take six years to complete. Project B has an NPV of
$60,000 and will take three years to complete. Project C has an NPV of $90,000 and
will take four years to complete. Based on this information, which project would you
pick?
A. They all the same value C. Project B
B. Project A D. Project C
5.
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Answer Questions 7 – 11 based on the information given below:
Presented below are the amounts of (a) the assets and liabilities of Spectrum Sounds as of December
31 and (b) the revenues and expenses of the company for the year ended on that date. The items are
listed in alphabetical order:
The opening balance of owner’s equity was $150,000. At year end, after the calculation of net income, the
owner, Kool Upal, withdrew $55,000
6. What is the Net Income / Loss for the year reference above:
a. $ 79,000
b. $ 70,000
c. $ 235,000
d. $ 69,000
9. If the total debt at the beginning of the year was $ 180,000, what would be the Debt to Equity
Ratio (D2E) on the December 31st?
a. 1.09
b. 1.11
c. 0.91
d. Not enough information provided
10. How much profit was generated by the equity invested in the organization as of December
31st?
a. 44.44%
b. 27.45%
c. 92.94%
d. 76.12%
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