HMWK # CB$-1$ Continued$-$Questions $7$ thru $12$

$13.$ Which method for evaluating capital investment proposals reduces the expected future net cash flows originating from the proposals to their present values and computes a net presenc value?

A$.$ Net present value

B$.$ Average rate of return

C$.$ Internal rate of return

D$.$ Cash payback

$8.$ An analysis of a proposal by the net present value method indicated that the present value exceeded the amount to be invested. Which of the following statements best describes the results of this analysis?

A$.$ The proposal is desirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis.

B$.$ The proposal is desirable and the rate of return expected from the proposal is less than the minimum rate used for the analysis.

C$.$ The proposal is undesirable and the rate of return expected from the proposal is less than the minimum rate used for the analysis.

D$.$ The proposal is undesirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis.

$6.$ Which method of evaluating capital investment proposals uses $9$ the concept of present value to compute a rate of return?

A$.$ Average rate of return

B$.$ Accounting rate of return

C$.$ Cash payback period

D$.$ Internal rate of return

$4.$ The present value of $$20,000($rounded to nearest dollar$)$ to $10$ be received two years from today, assuming an earnings rate of $128,$ is:

A$.$ $$17,860$

B$.$ $$15,940$

C$.$ $$14,240$

D$.$ $$12,720$

Reference PV Table in Question #$12$

$2.$ The methods of evaluating capital investment proposals can be If separated into two general groups $-$ present value methods and:

A$.$ past value methods

B$.$ straight$-1$ine methods

C$.$ cash payback methods

D$.$ methods that ignore present value

a$.$ The rate of earnings is $68$ and the cash to be received in one

$12$ year is $$10,000.$ Determine the present value amount, using the following partial table of present value of $$1$ at

compound interest:

$\backslash$table$[[$Year$,68,108,128],[1,\mathrm{.}943,\mathrm{.}909,\mathrm{.}893],[2,\mathrm{.}890,\mathrm{.}826,\mathrm{.}797],[3,\mathrm{.}840,\mathrm{.}751,\mathrm{.}712],[4,\mathrm{.}792,\mathrm{.}683,\mathrm{.}636]]$

$$ PV of Single Sum Table

Use for Questions: #$2,$ #$10,$ #$12,$

$($A: $,$$$9,090$