Reference no: EM133002024

Problem 1: Capital budgeting is:

a) identifying areas in an organization that are causing waste

b) the process of deciding which long-term investments or projects to acquire

c) the process of allocating funds to separate departments

d) the purchasing of new products to be used within the company

Problem 2: What is the payback for a project that requires a $10,100 initial investment and returns $3,200 the next year and $2,100 per year after that?

a) The payback period is 3 years and 3 months.

b) The payback period is 4 years and 5 months.

c) The payback period is 4 years and 3 months.

d) The payback period is 3 years and 5 months.

Problem 3: The internal rate of return (IRR) can be defined as which of the following? Select the best choice below.

a) the sum of the future cash flows discounted back to the current period

b) the number of years required to recover the initial investment

c) the results of the NPV converted to a ratio

d) the discount rate that sets NPV to 0