QUESTION: 37

DRAG DROP (Drag and Drop is not supported)

An investment appraisal has identified that a project has a positive net present value when discounted at the company's cost of capital. If the cost of capital is now increased, indicate whether each of the following appraisal measures will increase, decrease or stay the same.

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Answer(s): A

Explanation:

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QUESTION: 38

A goal congruent transfer price will always:

motivate divisional managers by maximising divisional autonomy.
align the decision making of divisional managers with the objectives of the organization as a whole.
align the decision making of divisional managers with the maximization of divisional profit.
ensure that profits are shared equally between the supplying and receiving divisions.

Answer(s): B

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QUESTION: 39

The following data are available for four projects with unequal lives.

A 10% discount rate is appropriate for all four projects.

Which project has the highest equivalent annual benefit?

Project A
Project B
Project C
Project D

Answer(s): B

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QUESTION: 40

The following information is available for four investment projects:

A discount rate of 12% is appropriate for all four projects. The organization is subject to capital rationing and wishes to prioritise the projects using the profitability index (PI).

Which project has the highest PI?

Project A
Project B
Project C
Project D

Answer(s): B

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QUESTION: 37

Explanation:

QUESTION: 38

QUESTION: 39

QUESTION: 40