Investors always want to see the net present value analysis in the business feasibility study. They prefer
Question:
Investors always want to see the net present value analysis in the business feasibility study. They prefer to invest money and resource on plans having a negative net present value because negative NPV is the indication of the more present value of earned profit than anticipated costs.
a. True
b. False
- 2- When preparing a feasibility analysis, the time value of money should be considered. The time value of money is a process of comparing present cash outlays to future expected returns
a. True
b. False
- 3- The cash flow projections include the amount of funds needed for startup and identifies where these monies will come from. The amount of equity capital is determined along with the amount and source of all borrowed funds and leases.
a. True
b. False
- 4- Technical feasibility study is the logistical or tactical plan of how your business will produce store deliver and track its product or service.
a. True
b. False
- 5-This part of the financial study assesses the attractiveness of the project to equity investors and the overall financial return on the project.
a. Determine the Return on Invested Capital
b. Prepare Profit and Cash Flow Projections
c. Determining the startup costs:
d. None of the answers is correct
- 6- A feasibility study is designed to reveal whether a project/plan is feasible. It is an assessment of the practicality of a proposed project/plan.
a. True
b. False
- 7- The graphical representation of unit sales and dollar sales needed to break even is referred to as (CVD)graph
a. True
b. False
- 8- One of the components of the technical feasibility study is Estimating the project's needs in terms of raw materials and equipment
a. True
b. False
- 9- Create a proforma for a new business will be based on revenue drivers, what we have control over, for example, the actual activities that you are doing that are driving revenue directly but not focusing on a revenue number.
a. True
b. False
- 10- When we create a proforma for a new business, we approach things from bottoms up perspective and that's what most investors would want to see.
a. True
b. False
- 11- The benefit of existing businesses is that you already have financial data generated by the company, so you should already have an income statement
a. True
b. False
- 12- The decisions on equipment requirements are also influenced by
a. the cost and availability of machinery
b. the availability and cost of spare parts
c. the availability of people who are skilled in those equipment
d. All answers are correct
- 13- Financial Forecasting:
a. reflects a set of assumptions regarding a company's financial position
b. doesn't provides guidance for controlling the firm's actions to achieve its objectives
c. is virtually error free when done correctly
d. all of the answers are correct
- 14- The detailed study of the marketing feasibility includes:
a. Study of demand factors & the aspects of supply and demand.
b. facilities provided by the state
c. restrictions that it places on the activities of the projects
d. The study of the production capacity, choosing the appropriate size for the project.
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta