1. Select only the statement that are true: (2) A. Companies with well diversified portfolios of projects should only be concerned with the market risk as quantified by the Beta coefficient of the portfolio. B. One method of incorporate risk into a capital budget is to use a risk-adjusted discount rate. C. None of the other statements/options is correct. D. It is impossible to reduce diversifiable or unsystematic risk by adding more projects to a portfolio.

2. Select only the statement that are true: (2) A. Approval of projects can be delayed or even cancelled because of the financial situation in a country. B. Economic feasibility and efficiency are two economic objectives of the engineering design process. C. None of the other statements/options is correct. D. Procurement cost is just one of a number of costs that form part of life cycle cost.

3. Select only the statement that are true: (2) A. The effects of inflation are removed when the real interest rate is used. B. None of the other statements/options is correct. C. R1000 today, in 2021, will in two years time, in 2023, have the power to purchase goods worth R950 today, if a constant inflation rate of 5% applies. D. Inflation increases the purchasing power of money.

4. Select only the statement that are true: (2) A. When dealing with very complex issues, models are often used to simplify the situation by focusing on a few essential variables. B. Earnings per share can be calculated by dividing the total earnings available to the company`s stockholders by the number of common stock outstanding.

C. None of the other statements/options is correct. D. The higher the risk associated with a project or a corporation the lower the required expected return by investors would be.

5. Select only one of the five options below. Thabo owns a motor car. The life cycle cost includes: (2) A. The cost of putting petrol into the car from time to time. B. The purchasing price of the car. C. The cost of replacing the cars tyres every few thousand kilometres. D. The cost of maintaining the car (taking it for services). E. All the statements are correct.

6. Select only the statement that are true: (2) A. None of the other statements/options is correct. B. The minimum acceptable rate of return (MARR) for a project is usually less than the companys cost of capital. C. Companies (and governments) with high levels of debt are considered riskier by lenders and they usually demand higher interest rates from them. D. If the income of companies with high levels of debt is affected by events such as natural disasters and lockdowns due to Covid-19, then they are less likely to pay interest on loans and repay debt (compared to companies with much lower levels of debt).

9. Select only the statement that are true: (2) A. All projects with a positive NPV should always be accepted and implemented if funds are limited. B. None of the other statements/options is correct. C. A project with a positive NPV is economically feasible. D. A project with an NPV of less than 0 should be rejected.

10. Select only the statement that are true: (2) A. The simple payback period does not consider the time value of money. B. The payback period is an indicator of risk. C. None of the other statements/options is correct. D. The payback period is the estimated time it will take for the estimated revenues and other economic benefits to recover the initial investment at a stated rate of return.

11. Select only the statement that are true: (2) A. The IRR of a service project can be calculated. B. The IRR of a revenue project can be calculated. C. None of the other statements/options is correct. D. Two service projects that are compared by a decision-maker generate the same revenue (have the same positive income), but their negative cash flows are different.