### 141 in capital rationing alternative proposals that survive initial and secondary sc 4294929

141. In capital rationing, alternative proposals that survive initial and secondary screening are normally evaluated in terms of:

A. present value

B. non-financial factors

C. maximum cost

D. net cash flow

142. A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $150,000. The present value of the future cash flows is $143,000. Should the company invest in this project?

A. yes, because net present value is +$7,000

B. yes, because net present value is -$7,000

C. no, because net present value is +$7,000

D. no, because net present value is -$7,000

143. A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $150,000. The present value of the future cash flows generated by the project is $145,000. Should they invest in this project?

A. yes, because the rate of return on the project exceeds the desired rate of return used to calculate the present value of the future cash flows.

B. no, because the rate of return on the project is less than the desired rate of return used to calculate the present value of the future cash flows.

C. no, because net present value is +$5,000

D. yes, because the rate of return on the project is equal to the desired rate of return used to calculate the present value of the future cash flows.

144. A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $170,000. The present value of the future cash flows is $185,000. The company’s desired rate of return used in the present value calculations was 10%. Which of the following statements is true?

A. The project should not be accepted because the net present value is negative.

B. The internal rate of return on the project is less than 10%.

C. The internal rate of return on the project is more than 10%.

D. The internal rate of return on the project is equal to 10%.

145. A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $100,000. The present value of the future cash flows at the company’s desired rate of return is $105,000. The IRR on the project is 12%. Which of the following statements is true?

A. The project should not be accepted because the net present value is negative.

B. The desired rate of return used to calculate the present value of the future cash flows is less than 12%.

C. The desired rate of return used to calculate the present value of the future cash flows is more than 12%.

D. The desired rate of return used to calculate the present value of the future cash flows is equal to 12%.

146. A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $100,000. The present value of the future cash flows at the company’s desired rate of return is $100,000. The IRR on the project is 12%. Which of the following statements is true?

A. The project should not be accepted because the net present value is negative.

B. The desired rate of return used to calculate the present value of the future cash flows is less than 12%.

C. The desired rate of return used to calculate the present value of the future cash flows is more than 12%.

D. The desired rate of return used to calculate the present value of the future cash flows is equal to 12%.