Quizz 2 FAD

Net cash flow is equal to:

• Net income + non-cash expenses

• Net income + cash expenses

• Net income - taxes + non-cash expenses

• None of the above

The Net Present Value (NPV) represents the difference between:

• • The initial cost of the investment and the present value of the cash flows generated by that investment.

• • The initial price of the investment and the present value of the cash flows generated by that financing.

• • The initial cost of financing and the acquired value of the cash flows generated by that investment.

• • None of the above.

The profitability index is the ratio between:

• • The ratio of the discounted cumulative cash flows and the invested capital

• • The invested capital to the sum of cash flows

• • The ratio between the invested capital and the NPV

• • None of the above

Investments made by companies:

• • Correspond to tangible, intangible, and financial assets

• • Are solely material

• • Are made in the short term

Operating and investment cycles lead to identical financing needs

• True

• False

Is it easier to create value...?

• In the choice of financing

• In the choice of investment

In general, high-risk investments are investments..................................

• strategic and modernization

• of capacity and renewal

• of capacity, innovation

  or strategic

• renewal or modernization investments

Let's take two projects A and B. The NPV of A is 125, while that of B is 150. The PI of A is 1.5, and that of B is 1.25.

• We choose project A.

• We choose project B.

• We cannot choose

A company wants to invest in a machine that costs 20,000 DT. Its estimated lifespan is 5 years. According to the forecasts related to this investment, the company would incur a gross result of –10,000 DT in the first year, and it would be taxed at a rate of 15%.

What would be the value of its first cash flow (CFN)?

• • -10,000 D

• • 6,000 D

• • -6,000 D

• • None of the above

Consider an investment project with the following discounted cash flows (CFN):

Year 1: Discounted CFN = 21,000 DT

Year 2: Discounted CFN = 32,000 DT

Year 3: Discounted CFN = 15,000 DT

Given that its NPV is 18,000 DT:

• The invested capital is 86,000 DT.

• The project's profitability index (PI) is 0.264.

• The project's PI is 1.36.

• We cannot calculate the project's PI.