FIN 571 Week 5 WileyPLUS Practice Quiz NEW - 100% Correct

Question 1

FIN 571 Week 5 WileyPLUS Practice Quiz NEW

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Multiple Choice Question 55

Genaro needs to capture a return of 40 percent for his one-year investment in a property. He believes that he can sell the property at the end of the year for $150,000 and that the property will provide him with rental income of $25,000. What is the maximum amount that Genaro should be willing to pay for the property?

$137,500

$125,000

$112,500

$150,000

Multiple Choice Question 54

The process of identifying the bundle of projects that creates the greatest total value and allocating the available capital to the projects is known as

risk analysis.

rationing.

capital rationing.

budgeting.

Multiple Choice Question 78

Capital rationing. You are considering a project that has an initial cost of $1,200,000. If you take the project, it will produce net cash flows of $300,000 per year for the next six years. If the appropriate discount rate for the project is 10 percent, what is the profitability index of the project?

2. 09
3. 09
4. 09
5. 18

Multiple Choice Question 89

What might cause a firm to face capital rationing?

If a firm rejects some capital investments that are expected to generate positive NPV’s.

If investors require return

Answer 1

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