Question 41
A project requires an initial investment of $50,000. It will generate positive cash flows for two years as follows.
The cost of capital is 12% per year.
What is the equivalent annual net present value of the project?
Give your answer to the nearest $10.
Question 42
An organization is considering purchasing a new machine which will cost $600,000. The new machine will generate cost savings of $200,000 each year for five years. The cost of capital is 12%.
The profitability index (PI) for the investment in the new machine is:
Give your answer to one decimal place.
Question 43
A company is deciding whether to invest in project A or project B. A decision tree has been prepared to illustrate the investment decision and its associated possible net present values (NPVs).
Which of the following statements is correct?
Question 44
Beyond Budgeting is essentially an approach that places modern management practices within a cultural framework. Analyze the following statements:
1. The organization structure should have clear principles and boundaries.
2. Managers should be given a high degree of freedom to make decisions.
3. Frontline managers should be made responsible for relationships with customers.
4. Information system should be transparent and ethical.
Which of the above statements relate to Beyond Budgeting?
Question 45
Which of the following factors would prevent a learning curve being observed for a task?