7/23/2020 4.

8 Week Summary and Graded Assessments | Week 4: Capital Budgeting: Decision Tools | Corporate Finance | edX

IIMBx FC101x
xperiagrapher
Corporate Finance

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Course / Week 4: Capital Budgeting: Decision Tools / 4.8 Week Summary and Graded Assessments

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GRADED ASSESSMENTS

Congratulations! You have completed Week Four of this course. It is time to test your understanding of the concepts
taught in this week. 

In the following unit, you will be provided with 10 questions.

INSTRUCTIONS:
Each question carries 1 point.

You have 1 attempt to answer a question.

Graded Question 1
1.0/1.0 point (graded)
If payback period is 5 years and the yearly cash in ows is $250 million, then the net initial investment will be:

$250 million

$500 million

$1000 million

$1250 million

Submit You have used 1 of 1 attempt

Graded Question 2
0.0/1.0 point (graded)
The internal rate of return (IRR) is

The same thing as the cost of capital.

The discount rate that equates the present values of cash in ows and cash out ows.

The same thing as the net present value.

The same thing as the pro tability index.

Submit You have used 1 of 1 attempt

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Graded Question 3
1.0/1.0 point (graded)
The following table gives the cash ows for Project A and Project B:

Year Project A Project B

0 -3000 -4000
1 1000 1500
2 1000 1800
3 2500 2000

If the discount rate is 15%, which project should we invest in?

Project A

Project B

Both A and B

Data insu cient.

Submit You have used 1 of 1 attempt

Graded Question 4
1.0/1.0 point (graded)
What is the IRR of Project A?

Year Project A
0 -3000
1 1000
2 1000
3 2500

18.54%

19.54%

23.54%

29.54%

Submit You have used 1 of 1 attempt

Graded Question 5
1.0/1.0 point (graded)
Refer to the table below to answer the following question.

Project Initial Investment NPV

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P 200 22
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7/23/2020 4.8 Week Summary and Graded Assessments | Week 4: Capital Budgeting: Decision Tools | Corporate Finance | edX
P 200 22
Q 180 26
R 185 38
S 380 10

The project with highest Pro tability Index is

Project P

Project Q

Project R

Project S

Submit You have used 1 of 1 attempt

Graded Question 6
1.0/1.0 point (graded)
Choose the correct option from the following:

NPV = PV of cash out ow – PV of cash in ow

NPV = PV of cash out ow + PV of cash in ow

NPV = PV of cash in ow - PV of cash out ow

NPV = PV of cash out ow / PV of cash in ow

Submit You have used 1 of 1 attempt

Graded Question 7
1.0/1.0 point (graded)
The pro tability index is most useful

When the NPV method and the IRR method give con icting signals.

When capital needs to be rationed.

When the cash ow pattern is unusual.

None of the above.

Submit You have used 1 of 1 attempt

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7/23/2020 4.8 Week Summary and Graded Assessments | Week 4: Capital Budgeting: Decision Tools | Corporate Finance | edX

0.0/1.0 point (graded)

One must know the discount rate of an investment project to compute its:

NPV, IRR, PI and payback period.

NPV and IRR.

Payback period and IRR.

NPV and PI.

Submit You have used 1 of 1 attempt

Graded Question 9
1.0/1.0 point (graded)
Sachin has an opportunity to invest Rs. 150,000 and get a return of Rs. 60,000 each year for the next 3 years. What is
the IRR of this investment?

8.70%

9.50%

9.70%

10.50%

Submit You have used 1 of 1 attempt

Graded Question 10
1.0/1.0 point (graded)
Rainbow Co. Ltd is considering a project that calls for an initial investment of $100,000. The expected net cash
in ows from the project are $12,500 for each of 10 years. Calculate the IRR of the project.

6.50%

5.45%

3.26%

4.28%

Submit You have used 1 of 1 attempt

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7/23/2020 4.8 Week Summary and Graded Assessments | Week 4: Capital Budgeting: Decision Tools | Corporate Finance | edX

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