Nothing Special   »   [go: up one dir, main page]
Scribd Logo
Upload

Welcome to Scribd!

  • 18 views

    FIN450 O1 Fall2020 LashaLabadze IndividualAssignment2

    Uploaded by

    Shehry Vibes
    This document contains a summary of an assignment for a finance course. It includes: 1) Course information - the course code, instructor, semester, and assignment details. 2) Student information - the assignment is individual work. 3) Regulations for the assignment - it contains multiple choice and problem questions worth a total of 100 marks. Students must show all work and answer all questions. 4) Sample multiple choice and problem questions are provided relating to net present value, internal rate of return, payback period, cash flows, cost of capital, inflation, and real interest rates.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    FIN450 O1 Fall2020 LashaLabadze IndividualAssignment2

    Uploaded by

    Shehry Vibes
    18 views4 pages
    This document contains a summary of an assignment for a finance course. It includes: 1) Course information - the course code, instructor, semester, and assignment details. 2) Student information - the assignment is individual work. 3) Regulations for the assignment - it contains multiple choice and problem questions worth a total of 100 marks. Students must show all work and answer all questions. 4) Sample multiple choice and problem questions are provided relating to net present value, internal rate of return, payback period, cash flows, cost of capital, inflation, and real interest rates.

    Original Description:

    FIN450

    Original Title

    FIN450_O1_Fall2020_LashaLabadze_IndividualAssignment2

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document contains a summary of an assignment for a finance course. It includes: 1) Course information - the course code, instructor, semester, and assignment details. 2) Student information - the assignment is individual work. 3) Regulations for the assignment - it contains multiple choice and problem questions worth a total of 100 marks. Students must show all work and answer all questions. 4) Sample multiple choice and problem questions are provided relating to net present value, internal rate of return, payback period, cash flows, cost of capital, inflation, and real interest rates.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    18 views4 pages

    FIN450 O1 Fall2020 LashaLabadze IndividualAssignment2

    Uploaded by

    Shehry Vibes
    This document contains a summary of an assignment for a finance course. It includes: 1) Course information - the course code, instructor, semester, and assignment details. 2) Student information - the assignment is individual work. 3) Regulations for the assignment - it contains multiple choice and problem questions worth a total of 100 marks. Students must show all work and answer all questions. 4) Sample multiple choice and problem questions are provided relating to net present value, internal rate of return, payback period, cash flows, cost of capital, inflation, and real interest rates.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    Academic Year: 2020/2021 Semester: Fall 2020

    Course Information
    Course Code: FIN450 Section: O1
    Instructor Name: Dr. Lasha Labadze

    Assignment Information
    Assignment 2 – Individual Marks Earned
    Assignment Type:
    (15)%
    Due Date: 19/12/2020 23:59 P.M
    No of Questions: 10 / 100
    Number of Pages: 4

    Student Information:
    Student Name: ………………………………………… ID: ………………

    Regulations:

    It is an individual assessment.
    Answer all the questions. Show all your work.
    Multiple Choice Questions (each question is worth 5
    points)

    1. If the net present value (NPV) of project A is $60, and that of project B is $60, then the net
    present value of the combined projects is:

    A. $120
    B. $60
    C. $3600
    D. $0

    2. You are given a job to make a decision on project X, which is composed of three independent
    projects A, B, and C that have NPVs of + $70, -$40 and + $100, respectively. How would you
    go about making the decision about whether to accept or reject the project?

    A. Accept project X as it has a positive NPV.


    B. Reject project X.
    C. Break up the project into its components: accept A and C, but reject B.
    D. Break up the project into its components: accept C.

    3. Given the following cash flows for project A: C0 = -1,000, C1 = +600, C2 = +400, and C3 =
    +1,500, calculate the payback period.

    A. one year
    B. two years
    C. three years
    D. cannot be determined

    4. If an investment project (normal project) has an IRR equal to the cost of capital, the NPV for
    that project is:

    A. positive.
    B. negative.
    C. zero.
    D. unable to determine.

    5. If the nominal interest rate is 7.5% and the inflation rate is 4.0%, what is the real interest rate?

    A. 4.0%
    B. 9.5%
    C. 3.4%
    D. 11.5%
    Problems (Each problem is worth 15 points)

    Problem 1
    Given the following cash flows for Project M:
    C0 = -1,000, C1 = +200, C2 = +700, C3 = +698
    calculate the IRR for the project.

    Problem 2
    Project X has the following cash flows: C0 = +2,000, C1 = -1,150, and C2 = -1,150. If the
    IRR of the project is 9.85% and if the cost of capital is 12%, would you accept or reject?

    Problem 3
    Story Company is investing in a giant crane. It is expected to cost $6.0 million in initial
    investment, and it is expected to generate an end-of-year after-tax cash flow of $3.0 million
    each year for three years. Calculate the NPV at 12%. Would you suggest company to
    invest?
    Problem 4
    The real interest rate is 3.0% and the inflation rate is 5.0%. What is the nominal interest
    rate?

    Problem 5
    Your firm expects to receive a cash flow in two years of $10,816 in nominal terms. If the real
    rate of interest is 2% and the inflation rate is 4%, what is the real cash flow for year 2?

    You might also like