Multiple Choice Questions
1. A project earns $10,000 a year for five years. The present total value of the project is (using a discount rate of 5.75%): a) $50,000 b) more than $50,000 c) less than $50,000
2. The NPV of a project Is S1,012, using a discount rate of 9.75% p.a. The rate of return on this project is: a. 9.75% b. more than 9.75% c. less than 9.75%
3. The NPV of a project Is 0, using a discount rate of 10%. The rate of return on this project is: a) 10% b) more than 10% c) less than 10%
4. A machine has a salvage value of $5,000. Using a discount rate of 5% p.a., the present value of the salvage value is: a) $5,000 b) more than $5,000 c) less than $5,000
5. The capital cost of a project that lasts for five years is $50.000. Using a discount rate of 2.95%. the annual worth of the capital cost Is: a) $10,000 b) more than $10,000 c) less than $10,000
6. A machine has a salvage value of $5,000 after five years. Using a discount rate of 2.95% pa., the annual worth of the salvage value is: a) $1,000 b) more than $1,000 c) less than $1,000
7. The NAW of a project is O. using a discount rate of 6%. The rate of return on this project is: a) 6% b) more than 6% c) less than 6%
8. The NAW of a project is $195, using a discount rate of 5.95%. The rate of return on this project is: a) 5.95% b) more than 5.95% c) less than 5.95%
9. The notation $5000 (PV/AV. 10% pa. 5 years) indicates that: a) $5000 Is a uniform annual value over 5 years and we want to convert this to the equivalent present value