Fin 515 Final Exam

|1. (TCO A) Which of the following does NOT always increase a company's market value? (Points : 5) |
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| [pic] Increasing the expected growth rate of sales |
| [pic] Increasing the expected operating profitability (NOPAT/Sales) |
| [pic] Decreasing the capital requirements (Capital/Sales) |
| [pic] Decreasing the weighted average cost of capital |
| [pic] Increasing the expected rate of return on invested capital |

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|2. (TCO F) Which of the following statements is correct? (Points : 5) |
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| [pic] For a project with normal cash flows, any change in the WACC will change both the NPV and the IRR. |
| [pic] To find the MIRR, we first compound cash flows at the regular IRR to find the TV, and then we discount the TV at the WACC to |
|find the PV. |
| [pic] The NPV and IRR methods both assume that cash flows can be reinvested at the WACC. However, the MIRR method assumes reinvestment|
|at the MIRR itself.