Practice Techniques of Capital Budgeting - 25.5 | 25. Capital Budgeting Techniques | Management 1 (Organizational Behaviour/Finance & Accounting)
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Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the Payback Period?

💡 Hint: It relates to how soon the investment can start generating profits.

Question 2

Easy

What is NPV?

💡 Hint: Think of it as measuring profits in today’s money.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What does Payback Period measure?

  • Time to recover initial investment
  • Total profit generated
  • Annual cash inflow

💡 Hint: It relates to how soon you can start making real profits.

Question 2

True or False: NPV considers the time value of money.

  • True
  • False

💡 Hint: Remember how future values diminish with time.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company is analyzing a project requiring an initial investment of $250,000. It will generate returns of $75,000 per year for five years. Calculate NPV, assuming a discount rate of 10%. Discuss implications if the NPV is negative.

💡 Hint: Remember to discount future cash flows before making your decision.

Question 2

Describe a scenario where using the Payback Period could lead to poor investment decisions. Provide alternatives that could have been better.

💡 Hint: Think about long-term versus short-term gains.

Challenge and get performance evaluation