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Emory University BUS 320 Sample final

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Bus 320: Sample Final Questions 1 True/False Questions: Circle the correct response. (1 point each) 1. T F A decrease in the firm’s discount rate (k) will increase NPV, which could change the ac ... cept/reject decision for a potential project. However, such a change would have no impact on the project’s IRR, hence on the accept/reject decision under the IRR method. 2. T F For a profitable firm with debt, an increase in its tax rate will decrease its WACC. 3. T F Present value refers to the value of cash flows that occur at different points in time. Thus, present values cannot be added to determine the value of a capital budgeting project. 4. T F The owners of Burrito Art are considering opening a Willy’s Burrito across the street. In valuing the new project, they would want to consider any reduction in sales suffered by Burrito Art. 5 T F Consider a project with an initial investment and positive future cash flows. As the discount rate is increased, NPV increases and the IRR remains constant. [Show More]

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