3 400,000 3 400,000 4 300,000 4 200,000 5 200,000 5 150,000 6 50,000 6 150,000 The company?s cost of capital is 10%. 19.13 What is the non-discounted payback period of Project Beta? A 2 years and 2 months B 2 years and 4 months C 2 years and 5 months D 2 years and 6 months Answer：D

19.14 What is the discounted payback period of Project Alpha? A Between 1 and 2 years B Between 3 and 4 years C Between 4 and 5 years D Between 5 and 6 years Answer：B

19.15 A capital investment project has an initial investment followed by constant annual returns. How is the payback period calculated? A Initial investment÷annual profit B Initial investment÷annual net cash inflow C (Initial investment－residual value)÷annual profit D (Initial investment－residual value)÷annual net cash inflow Answer：B

19.16 A machine has an investment cost of $60,000 at time 0. The present values (at time 0) of the

expected net cash inflows from the machine over its useful life are: Discount rate Present value of cash inflows 10% $64,600 15% $58,200 20% $52,100 What is the internal rate of return (IRR) of the machine investment? A Below 10%

B Between 10% and 15% C Between 15% and 20% D Over 20% Answer：B

19.17 An investment project has a positive net present value (NPV) of $7,222 when its cash flows

are discounted at the cost of capital of 10% per annum. Net cash inflows from the project are expected to be $18,000 per annum for five years. The cumulative discount (annuity) factor for five years at 10% is 3.791.

What is the investment ta the start of the project? A $61,016 B $68,238 C $75,460 D $82,778 Answer：A

19.18 The following statements relate to an investment project that has been discounted at rates of

10% and 20%:

1. The discounted payback period at 10% will be longer than the discounted payback at 20%.

2. The discounted payback period at 20% will be longer than the discounted payback at 10%.

3. The non-discounted payback period will be longer than the discounted paycback period. 4. The non-discounted payback period will be shorter than the discounted payback period. Which of the statements are true? A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4 Answer：D

19.19 Which of the following accurately defines the internal rate of return (IRR)?

A The average annual profit from an investment expressed as a persentage of the

investment sum

B The discount rate (%) at which the net present value of the cash flows from an

investment is zero

C The net present value of the cash flows from an investment discounted at the required

rate of return

D The rate (%) at which discounted net profits from an investment are zero Answer：B

19.20 An investment project has the following discounted cash flows ($?000):

Year Discounted rate

0% 10% 20% 0 (90) (90) (90) 1 30 27.3 25.0 2 30 24.8 29.8 3 30 22.5 17.4 4 30 20.5 14.5 30 5.1 12.3

The required rate of return on investment is 10% per annum. What is the discounted payback period of the investment project? A Less than 3.0 years B 3.0 years

C Between 3.0 years and 4.0 years D More than 4.0 years Answer：C

19.21 What is the effective annual rate of interest of 2.1% compounded every three

months? A 6.43% B 8.40% C 8.67% D 10.87% Answer：C

19.22 If the interest rate is 8%, what would you pay for a perpetuity of $1,500 starting in one

year?s time?(to the nearest $)