Corporate Finance and ERM (CFE) Modules and Cash Practice Questions

A company is evaluating a project with an initial investment of $500,000. If the project generates cash flows of $200,000 annually for 4 years, what is the payback period?

• AA. 3 years
• BB. 2.5 years
• CC. 4.5 years
• DD. 4 years

A firm expects to generate cash flows of $300,000 for the next 5 years. If the discount rate is 10%, what is the present value of these cash flows?

• AA. $1,000,000
• BB. $1,532,484
• CC. $1,500,000
• DD. $1,800,000

When interest rates fall, how is the present value of future cash flows affected?

• AA. Becomes negative
• BB. Decreases
• CC. Increases
• DD. Remains the same