12.6 - Financial Decision-Making in Organizations
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Practice Questions
Test your understanding with targeted questions
What is capital budgeting?
💡 Hint: It involves planning for future financial projects.
What do financing decisions involve?
💡 Hint: Think about how companies raise money.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does NPV stand for?
💡 Hint: It relates to present value calculations.
True or False: Working capital management focuses only on long-term investments.
💡 Hint: Short term vs. long term.
2 more questions available
Challenge Problems
Push your limits with advanced challenges
A startup is considering two projects: Project A which costs $50,000 has projected inflows of $10,000 for the first three years and $30,000 in year four. Project B costs $60,000 with inflows of $20,000 for the first three years and $10,000 in year four. If the discount rate is 8%, which project should they invest in?
💡 Hint: Use the formula NPV = ∑ Cash inflows / (1+r)^t and compare results.
A company must decide to pay a dividend of $5 per share or retain the profits for expansion. The expected return on reinvestment is 15%. If the company has 10,000 shares, calculate the potential benefit of reinvesting over one year versus paying the dividend.
💡 Hint: Consider long-term growth versus immediate payouts.
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