Question

Question 51 Compounding is the process of finding the present value of some future amount. Select...

Question 51

Compounding is the process of finding the present value of some future amount.

Select one:

True

False

Question 52

A growth stock is a stock that results in a high return with relatively low levels of risk.

Select one:

True

False

Question 53

The pure play approach:

Select one:

a. Cannot be used if the firm has preferred stock outstanding.

b. Should be used only if a firm has more than three divisions.

c. Can be used to find the cost of capital for a division.

d. Is most useful when each division makes a multitude of different products.

e. Is easier to implement than the subjective approach.

Question 54

Your firm seeks to obtain a short-term loan from a local bank. The banker quotes you a rate of 6%. This is a nominal rate.

Select one:

True

False

Question 55

A project which has a discounted payback period longer than its life also has a positive NPV.

Select one:

True

False

Homework Answers

Answer #1

51  Compounding is the process of finding the present value of some future amount :- This is False

52 A growth stock is a stock that results in a high return with relatively low levels of risk. :- False

53   The Pure Play Approach is :- Can be used to find the cost of capital for a division

54 Your firm seeks to obtain a short-term loan from a local bank. The banker quotes you a rate of 6%. This is a nominal rate. :- true

55 A project which has a discounted payback period longer than its life also has a positive NPV :- This is False .

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