Multiple Choice QuestionA company is considering two projects. Project 1 has an initial investment of $60,000 and expected cash inflows of $20,000 each year for 5 years. Project 2 has an initial investment of $80,000 and expected cash inflows of $20,000 each year for 10 years. Using the payback period as the evaluation method, which investment should be chosen by management?Multiple choice question.Project 2 with total cash inflows of $200,000Project 1 with payback period of 3 yearsProject 2 with payback period of 4 yearsProject 1 with total cash inflows of $100,000

Multiple Choice QuestionA company is considering two capital investments. Each requires an initial investment of $15,000 and has a 4 year useful life. Investment A has expected cash inflows of $5,000 each year for the 4 years for total cash inflows of $20,000. Investment B has the following expected cash flows: Year 1: $8,000; Year 2: $6,000; Year 3: $4,000; Year 4: $2,000; Total cash flows: $20,000. Using the payback period as the evaluation method, which investment should be chosen by management?Multiple choice question.Investment BInvestment ABoth investments have the same payback period.

Multiple Choice QuestionA company is considering two investment projects. Both have an initial cost of $50,000. One project has even cash flows and the other uneven cash flows. Which evaluation method would be most appropriate?Multiple choice question.Payback periodInternal rate of returnNet present valueAccounting rate of return

PaybackConsider two projects: Project A and Project B. Project A requires an initial investment of ₹50 lakh and Project B requires an initial investment of ₹30 lakh. The expected cash flows for the two projects are as below (in ₹):Year 1 2 3 4Cash flow for Project A 10 40 15 15Cash flow for Project B 10 10 15 20Using the payback period method here, which project would you select?Project AProject B

Case StudyThe expected cash flows of three projects are given below. The cost of capital is 10 per cent. (Amount in INR.)Period   Project A Project B   Project C 0 ( 5000) ( 5000) ( 5000)1 900 700 2,0002 900 800 2,0003 900 900 2,0004 900 1000 1,0005 900 1100  6 900 1200  7 900 1300  8 900 1400  9 900 1500  10 900 1600  * CALCULATE the payback period, net present value, internal rate of return and accounting rate of return of each project.*IDENTIFY the rankings of the projects by each of the four methods. Based on the calculations, choose the correct answers of  the below mentioned questions.

Multiple Choice QuestionA company needs to choose between two investment opportunities. Project 1 has a cost of $500,000 and expected NPV of cash flows of $450,000. Project 2 has a cost of $800,000 and expected NPV of cash flows of $750,000. Using profitability index as the evaluation method, the company should choose:Multiple choice question.either project. Both are acceptable because the difference between cost and NPV is $50,000 for bothProject 2 because it has a higher NPVProject 1 because it has a higher indexProject 2 because it has a higher index