Which of the following is not an advantage of a DCF valuation? Select all that apply. Is extremely sensitive to the cost of capital and perpetuity growth rates Requires a lot of inputs One of the soundest valuation techniques Provides an opportunity to learn about a business

Which of the following is not an advantage of a DCF valuation? Select all that apply. Is extremely sensitive to the cost of capital and perpetuity growth rates Requires a lot of inputs One of the soundest valuation techniques Provides an opportunity to learn about a business

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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26
Which of the following is not an advantage of a DCF valuation? Select all that apply.
Is extremely sensitive to the cost of capital and perpetuity growth rates
Requires a lot of inputs
One of the soundest valuation techniques
Provides an opportunity to learn about a business

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Which of the following is not an advantage of a DCF valuation? Select all that apply. Requires a lot of inputs One of the soundest valuation techniques Provides an opportunity to learn about a business Is extremely sensitive to the cost of capital and perpetuity growth rates
Question A18 Which of the following is not an advantage of the NPV investment appraisal technique when compared with the ARR investment appraisal technique? A It shows the increase in shareholder wealth B It considers the time value of money C It is more complicated to calculate and understand D It allows risk to be factored in by adjusting the cost of capital
QUESTION 6 Which of the following statements is true? O A. Companies look for investments with payback periods that are larger than their maximum accepted payback period O B. An investment with a profatibility index less than 1 is profitable and desirable O C.A projected is accepted if the IRR is less than the cost of capital O D. None of the above are true
12 inance Which of the following is correct as it relates to using Excel Solver in case of capital rationing? Group of answer choices One creates binary variables that have the value of either 1 (chosen) or 0 (not chosen). One sets the objective such as to maximize the net present value of chosen investments. One sets the constraint such as the total investments being greater than the amount of capital available.
10 1. About the capital structure theory 1) Why is the perfect capital market important to the capital structure theory? 2) Under what kind of the perfect capital market, is the optimal capital structure 100% debt? Why? 2. There are some M&As, which are driven by cognitive errors such as managers’ hubris. Explain how these kinds of M&As are motivated and their plausible outcomes
QUESTION 6 Which of the following statements is true? O A. Companies look for investments with payback periods that are larger than their maximum accepted payback period O B. An investment with a profatibility index less than 1 is profitable and desirable OC.A projected is accepted if the IRR is less than the cost of capital O D. None of the above are true
kindly help with these questions 1. In _____ approach, the capital design choice is pertinent to the valuation of the firm. a. Net gain b. Net working pay c. Customary d. Mill operator and Modigliani 2. A basic presumption of the net working pay (NOI) way to deal with valuation is: a. that obligation and value levels stay unaltered. b. that profits increment at a steady rate. c. that ko stays steady paying little heed to changes in influence. d. that interest cost and duties are remembered for the estimation.
Under what circumstances should the Profitability Index be used to select projects? Question 4Select one: a. In all cases where projects are mutually exclusive. b. In all cases where projects are independent. c. When there are independent projects, and the firm has insufficient capital to undertake all positive-NPV projects. d. When there are mutually exclusive projects, and the firm has sufficient capital to undertake all positive-NPV projects.
Select all that are true with respect to the Cost of Capital. Group of answer choices The cost of capital is the discount rate to use when evaluating investment opportunities There is one cost of capital for every firm, and that one rate should be used for evaluating all investment opportunities The cost of capital for an asset is driven by an asset's riskiness The cost of capital is driven by how we raise funds to pay for an investment opportunity The cost of capital for a project is driven by the systematic risk of that project When estimating the cost of capital for a project, it is the total risk of that project that matters
Which of the following decision criteria is the easiest to use and very popular among investors? O Payback period. O Internal rate of return. O Average accounting return. Net present value. O Discounted return on investment.
Question 6 Which one of the following methods predicts the amount by which the value of a firm will change if a project is accepted? O Payback O Profitability index O Net present value O Internal rate of return O Discounted payback
3. Suppose your firm is going to finance a new investment project with only retained earnings. The manager claims that since the earnings are already being retained and that since no outside financing is required, the project should be evaluated at the risk-free rate of return. Is this appropriate? Are retained earnings risk-free? Why or why not? (3 marks)

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