4. Finance
Investment Appraisal — Quiz
Test your understanding of investment appraisal with 5 practice questions.
Practice Questions
Question 1
A project has an initial investment of $$ \$100,000 $. The expected cash inflows are $ \$30,000 $ in Year 1, $ \$40,000 $ in Year 2, and $ \$50,000 $$ in Year 3. If the discount rate is 10\%, what is the Net Present Value (NPV) of the cash flow in Year 2?
Question 2
Which of the following best describes the concept of 'time value of money' in investment appraisal?
Question 3
When evaluating an investment using the Payback Period method, what is the decision rule for accepting a project?
Question 4
A project has an initial investment of $$ \$150,000 $. It is expected to generate annual net profits of $ \$30,000 $$ for 5 years. Calculate the Average Rate of Return (ARR) for this project.
Question 5
Which of the following is a qualitative factor that considers the potential for an investment to align with a company's long-term strategic goals and mission?