Calculating ReTurn On Investment

...

Score: 1 of 1

7. According to the authors of “Financial Intelligence,” which of the following will be the most work for your IBC company in determining ROI on a proposed capital expenditure?

->gathering data about the cost of the expenditure and the predicted cash flows that will result.

figuring out the appropriate formula to apply.

convincing your investors (or Board of Directors) that ROI should be a significant consideration.

understanding the payback period.

Score: 1 of 1

8. Present Value is:

None of the above

->The current worth of a future sum of money

What a given amount of cash will be worth in the future if it loaned out or invested

The amount of money one currently holds

Score: 1 of 1

9. Which of the following about the required rate of return is FALSE?

The required rate of return is also called the “hurdle rate”

The required rate of return is the rate companies require before they will make an investment

The required rate of return should always be higher than the cost of capital

->The required rate of return is typically set lower for riskier projects than for less risky ones

Score: 1 of 1

10. How can a future value be brought back to present value?

Through the use of a standard rate

Through the use of an inflation rate

Through the use of an interest rate

->Through the use of a discount rate

Score: 1 of 1