Wednesday, February 9, 2011

Chapter 5

1. The future value is always lower as the present value, because money today is more worth than in the future.

True / False

2. The IRR is always a better measurement as the NPV.

True / False

3. If the IRR is higher than the required return, an investment should be accepted.

True / False

4. An investment with a positive NPV shouldn’t be rejected.

True / False

5. An annuity is characterized by unequal periodic payments.

True / False

6. What is the PV of following investment: CF in the first year 15.000, second year 23.000, third year 23.000, fourth year 30.000. The market rate is 7%.

a) 71,234,56

b) 50,756,32

c) 75,769,49

d) 80,455,23

7. What is the IRR, taking the same CFs from exercise 6?

a) 13.00%

b) 4.05%

c) 10.08%

d) 9.78%

8. What is meant to be the best measurement for an investment?

a) IRR

b) MRR

c) NPV

d) FV


False, False, True, True, False, c), d), c)

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