Practice Quiz Chapter 05

* not completed

. Please see the PDF attachment to answer this question. Compute the net present worth of each project at i=15%. Which project or projects are acceptable?

a) Project B is acceptable correct incorrect

b) Project A is acceptable correct incorrect

c) Both projects are acceptable correct incorrect

d) Neither project is acceptable correct incorrect

* not completed

. An NGO has just completed a new engineering complex worth $25 million. A campaign has planned to raise funds for future maintenance costs, which are estimated at $1.5 million per year. Assuming that the NGO can create a trust fund that earns 6% interest annually, how much has to be raised now to cover the perpetual string of $1.5 million in annual costs?

a) $20 million correct incorrect

b) $800000 correct incorrect

c) $10 million correct incorrect

d) $25 million correct incorrect

* not completed

. A 6%, 10-year bond has a $1000 face value. You want to earn at least 8% annually, compounded semi-annually on this investment. How much should you pay for this bond?

a) $560.22 correct incorrect

b) $983.02 correct incorrect

c) $864.109 correct incorrect

d) $540.65 correct incorrect

* not completed

. A newly constructed dam costs $4 million. This dam needs renovation every 10 years at a cost of $800,000. Annual repairs and maintenance are estimated to be $50,000 per year. If the interest rate is 4%, what is the capitalized cost of the bridge?

a) $6,916,000 correct incorrect

b) $7,420,000 correct incorrect

c) $890,000 correct incorrect

d) $789,000 correct incorrect

* not completed

. Please see the PDF attachment to answer this question. The city of Abbotsford is building a new library. There are two alternatives for insulating and heating the building. An interest rate of 8% will be used and the library will have an estimated life of 40 years. Which alternative is better?

a) Alternative A is better correct incorrect

b) Alternative B is better correct incorrect

c) Both of them have the same cost correct incorrect

d) Both of them have different cost correct incorrect

* not completed

. You want to take a year leave in 6 years' time and want to accumulate $10,000 by then to spend. How much of a single deposit must you make today that will earn interest at the rate of 5%?

a) $7,000 correct incorrect

b) $7,462.15 correct incorrect

c) $7,598.95 correct incorrect

d) $7,614.42 correct incorrect

* not completed

. Please see the PDF attachment to answer this question. If MARR is 14%, which project should be adopted?

a) Project X should be accepted correct incorrect

b) Project Y should be accepted correct incorrect

c) Both projects should not be accepted correct incorrect

d) Both projects have different net present worth correct incorrect

* not completed

. Please see the PDF attachment to answer this question. What is the crossover rate for Project X and project Y?

a) 7.6% correct incorrect

b) 8.6% correct incorrect

c) 15.6% correct incorrect

d) 17.6 correct incorrect

* not completed

. Please see the PDF attachment to answer this question. Which project should be adopted given capital rationing and the opportunity cost of capital is 10%?

a) Project X correct incorrect

b) Project Y correct incorrect

c) Both of them have the same net present worth correct incorrect

d) Both of them have different net present worth correct incorrect

* not completed

. Please see the PDF attachment to answer this question. What is the net present worth of the Venture Project given the opportunity cost of capital is 12%?

a) $18,434 correct incorrect

b) $20,645 correct incorrect

c) $80,000 correct incorrect

d) $666,667 correct incorrect