INVESTMENT PROJECT APPRAISAL

CHAPTER 1
1-15. In your opinion, during the operating project, should the
investor and credit institutions continue to evaluate the project?
1-16. What are the differences between the perspectives on project
evaluation? Is it necessary for a project to be feasible from all
evaluation perspectives?
1-17. Which subject is the perspective of project evaluation from a
financial perspective? Which subject is the perspective of project
evaluation from an economic standpoint?
1-18. If a project is feasible from a financial perspective but not
feasible from an economic perspective, what can the government or
the authority do to make the project possible or impossible to
implement?
1-19. If a project is economically feasible, does it mean that the
project must also be socially feasible?
1-20. What is the difference between an investment project and a
business production plan in the credit provision activities of credit
institutions in Vietnam?
MULTIPLE CHOICE

1-1. Investment projects are usually implemented for:

A. Short
B. Medium to long – term
C. Maybe short or medium to long – term
D. No fixed time to end

1-2. Which of the following statements is correct?

A. The total capital investment for a project is usually very large
B. The definition of the project does not include the scale of
investment capital
C. The scale of capital investment of a project is often not
predetermined
D. None of them are correct

1-3. The objectives of a project include:

A. Expanding the market share
B. Improving product quality
C. Modernizing the production process
D. All of them are correct

1-4. The initial forms of investment capital in a project include:

A. Equity capital and working capital
B. Equity capital and loan capital
C. Financial assets, physical assets, and intangible assets
D. All of the above are correct
1-5. What characteristics must an investment project have?
A. Must identify the necessary human resources for the project
B. Must accept the risks that may occur
C. Must describe the uniqueness of the project’s product
D. All of the above are correct

1-6. Which of the following activities is considered part of the

project investment process?
A. Creating a specific product
B. Having a start and an end date
C. Doing it only once
D. All of the above are correct

1-7. Which of the following is a need for the project’s capital use?
A. Financial investment
B. Investing in other businesses
C. Paying off debts
D. Dividend payments

1-8. Projects aimed at improving and upgrading the quality of

products, goods and services are:
A. Stand-alone investment projects
B. Expansion investment projects
C. In-depth investment projects
D. All of the above are correct
1-9. A project that comprehensively and in detail studies the
related aspects is:
A. Pre-feasibility study
B. Feasibility study
C. Horizontal investment project
D. Vertical investment project

1-10. Which of the following statements correctly reflects that two

projects are independent?
A. Accepting or rejecting this project does not affect the decision to
accept or reject another project.
B. Accepting or rejecting this project will lead to accepting or
rejecting another project.
C. Accepting this project will have to abandon another project
D. None of the statements indicate that the two projects are
independent

1-11. Private investment projects aimed at

A. Financial benefit
B. Economic benefits
C. Social benefits
D. All of the above answers are correct.

1-12. Project implementation objectives should be determined

during which phase of the project cycle?
A. Research investment opportunities
B. Research on money is quite experimental.
C. Feasibility study
D. Project implementation
1-13. Choose the correct statement.
A. All projects regardless of investment capital scale must conduct
research through two steps: pre-feasibility study and feasibility
study.
B. All projects regardless of investment capital scale only need to
conduct a 1-step study as a feasibility study.
C. Large-scale investment projects need to be researched in two
steps: pre-feasibility and feasibility studies. Projects with not too
large-scale investment only need to be researched in one step:
feasibility study.
D. Depending on the scale and nature of each type of project, the
person with the authority to make investment decisions will
decide whether to conduct a one-step study, which is a
feasibility study or to conduct a two-step study, which is a pre-
feasibility study and a feasibility study.

1-14. Project implementation includes work

A. Design and Construction

1-15. At what stage in the project cycle is the project management

board established?
A. Project Operation

1-16. At what stage in the project life cycle should quantitative

risk analysis be performed?
A. Pre-feasibility study phase
B. Feasibility study phase
C. Operational phase
D. All of the above answers are correct
1-17. In which cases is project liquidation carried out?
A. The investment project has expired.
B. The investor was forced to cease operations.
C. The investor went bankrupt.
D. All of the above answers are correct.

1-18. A project is said to be feasible if

A. The project must fully comply with the provisions of the law.
B. The project is feasible.
C. The project must be financially viable and/or socio-
economically viable.
D. The project must satisfy the above three requirements.

1-19. The project analysis framework includes the following

aspects, ranked in order:
A. Market - Technology - Human resources
B. Market - Technology - Human resources – Finance
C. Market - Technology - Human Resources - Finance - Economy
D. Market - Technology - Human resources - Finance - Economy –
Society

1-20. Market analysis is the analysis:

A. The market for the output products of the mante pas project
B. The market for consuming project input products
C. Labor market
D. All of the above answers are correct

1-21. Technical Analysis is an analysis of

 A. Constructing and setting up equipment of the project
B. Materials and inputs of the project
C. Environmental factors of the project
D. All of the above

1-22. Analyze the demand of procurement officers is implemented

during the stage
A. Project planning
B. Project construction
C. Project operation
D. All of the above
1-23. Financial project analysis is an analysis of financial
performance brought to
A. Banks
B. Shareholders
C. Investors
D. All of the above
1-24. Economic analysis measures
A. The contribution of the project to economic growth
B. The ability to satisfy the basic needs of the economy
C. The income distribution within the economy
D. All of the above
1-25. Social impact analysis measures
A. The ability to satisfy the basic needs of the economy
B. The income distribution for beneficiaries
C. The social impact brought by the project
D. All of the above
1-26. Choose the correct statement
A. The content of Investment project appraisal is based on research
and analysis of the project.
B. Using analysis of the market, technology, personnel, and project
management as a basis for evaluating the financial performance
of the project
C. Project appraisal is to show the feasibility of many aspects
related to the upcoming project.
D. All of the above answers are correct.

1-27. The investor participates in appraising at which stage of the

project setup cycle?
A. Pre-feasibility study
B. Feasibility study
C. Project construction
D. All stages in the project setup cycle

1-28. Credit unions participate in which stage of the project set up

cycle
A. Pre-feasibility study
B. Feasibility study
C. Project construction
D. Both B and C are correct

1-29. Government agencies participate in which stage of the

project set up cycle
A. Pre-feasibility study
B. Feasibility study
C. Project construction
 D. Both B and C are correct

1-30. Role of project appraisal

A. Avoid implementing ineffective projects while also not
missing out on valuable investment opportunities.
B. Implement the function of checking and auditing throughout
the entire economic life of the project.
C. Save resources and labor of the economy.
D. All of the above answers are correct.

1-31. At which stage is project appraisal conducted?

A. Preliminary feasibility study
B. Feasibility study
C. Project operation
D. All stages of the project cycle

1-32. At which stage is the preliminary estimate of the demand for

goods and services generated by the project conducted?
A. Investment opportunity study
B. Preliminary feasibility study
C. Feasibility study
D. Project operation

1-33 At which appraisal stage is the tendency to underestimate

the project's benefits while overestimating costs most likely to
occur?
A. Investment opportunity study
B. Preliminary feasibility study
 C. Feasibility study
D. Project operation

1-34. At which appraisal stage is the accuracy of key project

variables further enhanced?
A. Investment opportunity study
B. Preliminary feasibility study
C. Feasibility study
D. Project operation

1-35. At which appraisal stage is a re-examination of financial,

economic, and social criteria conducted?
A. Preliminary feasibility study
B. Feasibility study
C. Detailed design
D. Project operation

1-36. At which appraisal stage is the actual result compared to the

initial forecast?
A. Preliminary feasibility study
B. Feasibility study
C. Detailed design
D. Project operation

1-37. From which perspectives can a project be appraised?

A. Financial
B. Economic
C. Social
 D. All of the above

1-38. From which perspective do investors, banks, and

shareholders appraise a project?
A. Financial
B. Economic
C. Income distribution
D. Basic needs

1-39. From which perspective do government agencies appraise a

project?
A. Economic
B. Income distribution
C. Basic needs
D. All of the above

1-40. A project is considered feasible when the project:

A. Must ensure legal, scientific, and practical feasibility.
B. Must be feasible in all research aspects.
C. Must be feasible in all appraisal perspectives.
D. All are correct.

1-41. For a project to be implemented, it needs to achieve

effectiveness in:
A. Finance
B. Economics
C. Society
D. All aspects
1-42. What measures should the government take when a project
does not bring financial efficiency to the investor and does not
benefit the economy?
A. Reduce taxes
B. No subsidies
C. Set a ceiling price
D. The government does not need to take any measures

1-43. What measures should the government take when a project

does not bring financial efficiency to the investor but benefits the
economy?
A. Reduce taxes
B. No subsidies
C. Set a ceiling price for the output product
D. All are correct

1-44. What measures should the government take when a project

brings financial efficiency to the investor but does not benefit the
economy?
A. Increase taxes
B. Subsidies
C. Remove the ceiling price
D. All are correct

1-45. In project financial analysis or appraisal, which price is

referred to?
A. Market price
B. Economic price
 C. Actual price
D. Shadow price

1-46. In project economic analysis or appraisal, which price is

referred to?
A. Actual price
B. Nominal price
C. Market price
D. Real price
1-47. For private investment projects, what is the basis for the
investor's decision to invest?
A. Financial efficiency
B. Economic efficiency
C. Social efficiency
D. All are correct

1-48. For private investment projects, the basis for the state
agency with competent authority to grant a license or permit or to
support, encourage, or grant investment incentives is:
A. Feasibility in terms of market, technology, and management
B. Financial efficiency
C. Economic and social efficiency
D. All are correct

1-49. For public investment projects, the basis for the state agency
to decide on investment is:
A. Feasibility in terms of market, technology, and management
B. Financial efficiency
 C. Economic and social efficiency
D. All are correct

1-50. Company MN is planning an investment project of 28 billion

VND to buy a new piece of equipment to replace the old one,
which has a market value of 20 billion VND and a book value of
12 billion dong, depreciated over the next 3 years using the
straight-line method. The 28 billion dong investment is
considered:
A. An expansion investment
B. A replacement investment
C. A diversification investment
D. All are incorrect

1-51. In 202X, MYA corporation specializes in producing instant

noodles investing in a project on changing food additives used in
the process of producing instant noodles. New food additives do
not have any toxic substances and just use ingredients in the
permissible list of the Ministry of Health. Project changing these
food additives is:
A. Replacement investment
B. Expansion investment
C. In-depth investment
D. Expansion and In-depth combine

1-52. XYZ joint-stock company is implementing a project to

produce rolled steel. In the process of rolling steel, rust forms on
its surface. To eliminate this steel rust, they use a process of
purifying by mineral acid HCL. The company is considering
executing the investment project “Dây chuyền tái sinh axit HCL”
which aims to reuse acid HCL. This project “Dây chuyền tái sinh
axit HCL” is ranked in:
A. Independent investment
B. Expansion investment
C. In-depth investment
D. Supplement investment

1-53. The reason why a company replaces a present project is:

A. The new project increases more value of the company
B. Technology project suddenly changes
C. Strategy investment of the company change
D. All of the above answers are correct

1-54. When setting up investment projects, market analysis

results have an important meaning in evaluating the success of
investments. Because market analysis result
A. Help analysts evaluate the technical feasibility aspect of
the project
B. Decide the feasibility power level of the project
C. Evaluate the feasibility of the workforce of the project
D. All of the above answers are correct

1-55. Management and human resources research in the process

of creating the project does not directly affect which of the
following decisions?
A. Narrow or expand the size of the project
B. The consumption area of the project
C. Adjusting product quality accordingly
 D. All of the above answers are correct

1-56. When making the decision should invest in the project

under consideration, what mistakes do investors always make?
A. Accepting bad projects and skipping good ones
B. Accepting projects that exceed the financial resources of
investors
C. Skipping projects that are within the financial resources of
investors
D. All of the above answers are correct

1-57. Role of frame investment project appraisal

A. Instructing contents of project appraisal
B. Instructing to evaluate the feasibility of the project
C. Instructing sequence of appraisal means of a project
D. Showing standpoints project appraisal

1-58. The public investment project always has the benefit of

negative finance but appraisers still have to execute appraising
finance of these projects because:
A. The effect on finance is the top criterion for the public
investment project
B. To guarantee the sponsorships for the construction stage
and action stage of the project
C. Investigating the reason why the project is inefficient in
finance
D. All of the above answers are correct

1-59. Which following statement is not correct?

A. Investment project appraisal helps investors decrease
mistakes in making a decision
B. Investment project appraisal helps investors control risk
 C. Investment project appraisal helps investors determine the
capital structure for the project
D. Investment project appraisal helps investors make
investment decisions to gain maximum profit

1-60. The reason a company can conclude the present project and
start a new replacement project is:
A. Because the strategy investment of the company changes
B. The new project has higher returns than the old one
C. Consumers' taste change
D. All of the above answers are correct
3-1. The purpose of cash flow forecasting is to:
A. Determine the financing needs and sources for the project
B. Assess the project's debt repaying capacity and payback period
C. Evaluate the project's financial performance
D. All of the above

3-2. Characteristics of profitable cash flow:

A. Nominal profit recorded in accounting books
B. Actual profit received by investors
C. Accurately measures the project's debt repaying capacity
D. All of the above

3-3. Characteristics of project's cash flow:

A. Accurately measures the timing of cash inflows and cash outflows
B. Shows the actual amount of cash that investors have or lack
C. Accurately assesses the project's ability to service its debt obligations
D. All of the above

3-4. Incremental cash flow is defined as:

A. The incremental cash flow to the investor if the new project is undertaken compared to if it is not
undertaken.
B. The incremental cash flow to the investor if the expansion project is undertaken compared to if it is
not undertaken.
C. The incremental cash flow to the investor if the replacement project is undertaken compared to if it
is not undertaken.
D. All of the above.

3-5. Sunk cost of a project is defined as:

A. Costs incurred during the project's preparing investment phase.
B. Costs cannot be recovered if the project is abandoned.
C. Costs are irrelevant to the investment decision.
D. All of the above.
3-6. Opportunity cost is defined as:
A. The highest return that was forgone.
B. The lowest return that was forgone.
C. The next best return that was forgone.
D. The next lowest return that was forgone.

3-7. Which of the following project cash flows can be considered as after-tax cash flow?
A. Operating cash flow
B. Investing cash flow
C. Financing cash flow
D. All of the above

3-8. Which of the following costs is considered a sunk cost in a project?

A. Project's establishing costs
B. Design and construction costs
C. Construction commencement costs
D. Project's company formation costs

3-9. A company is considering a new project. The company currently owns a piece of land that can be
used for the project, but the existing building on the land must be demolished. Which of the following
costs should not be included in the project's cash flow?
A. The market value of the existing building
B. Demolition and site preparation costs
C. Costs of constructing a road for the project last year
D. Opportunity cost of using equipment from another project

3-10. A company specializes in manufacturing steel pipes. The company's management is considering
a new project to produce aluminum pipes, a new product line. Which of the following costs should be
charged to the project?
i. The market value of the company-owned land used for the project is 100 billion VND.
ii. The project uses 20% of the idle capacity of the company's previously invested fire protection
system worth 10 billion VND.
iii. The company's revenue from selling steel pipes decreased by 300 billion VND due to the project.
A. i, ii
B. ii, iii
C. i, iii
D. i, ii, iii

3-11. Consider the following items: i/ Expenses for setting up investment projects; ii/ Workers'
salaries during the production period; iii/ Depreciation expenses; iv/ Collection of proceeds from
sales; v/ Only the cost of construction of the project works. Which of the above items are not recorded
in the cash inflow and cash outflow of the project?
A. i, iii
B. ii, iii, v
C. iii, iv, v
D. i, ii, iii, v
3-12. When should the sunk cost be taken into account in the cash flow of the project?
A. When the sunk cost is relatively large
B. When the sunk cost is borne by the investor
C. When the sunk cost is the cost of project formulation and appraisal
D. Sunk costs should not be saved in the project cash flow

3-13. Principles for recording sunk costs of projects are:

A. Recorded in the total investment of the project
B. Included in the cash outflows for the initial investment of the project
C. Considered as a cash operating expense of the project
D. All answers are correct

3-14. Expenses for making environmental impact assessment reports of projects:

A. Recorded in the investment cash flow of the project
B. Recorded in the total investment but not in the investment cash flow of the project
C. To be considered as a pre-operating expense
D. To be considered as an opportunity cost.

3-15. Opportunity costs of land used in projects are determined by:

A. Transfer price on the market
B. Land rents on the market
C. The price is valuated by the capital contributors
D. Lease prices of the State

3-16. When the project incurs opportunity costs calculated according to the market rent, these costs
shall:
A. Recorded in cash outflows from project operations.
B. Recorded in the project's operating expenses.
C. Recorded in cash outflows from project operations and recorded in the project's operating expenses
D. Not recorded in the cash outflows from the project's operation and also not recorded in the project's
operating expenses

3-17. When establishing the operating cash flow of the project, the opportunity costs calculated
according to the market rental price shall:
A. Recorded in cash outflows from project activities (direct method) and adjusted upwards with after-
tax profit of the project (indirect method).
B. It is recorded in the cash outflows from the project's operation (direct method) and adjusted down
from the project's after-tax profit (indirect method).
C. Not recorded in cash outflows from project activities (direct method) and adjusted upwards with
after-tax profit of the project (indirect method).
D. Not recorded in cash outflows from project activities (direct method) and adjusted down to the
project's after-tax profit (indirect method).

3-18. Which of the following impacts has increased the cash flow of other projects?
A. Yogurt Project and Fermented Yogurt Water Project
B. Projects on oral specialty drugs and projects on injectable specialty drugs
C. Gas stove project and electric stove project
D. Billiards café project and office lunch project
3-19. Which of the following impacts reduces the cash flow of other projects?
A. Apple Watch Project and Iphone Project
B. Gas Station Project and Rest Station Project
C. Walking Shoes Project and Running Shoes Project
D. Pig breeding project and catfish farming project.

3-20. Which of the following impacts increases or loses the cash flow of other projects?
A. Extension investment projects that reduce the revenue of the project before extension
B. Replacement investment projects that cause loss of revenue of the replaced projects
C. Additional investment projects that increase revenue for investors
D. All answers incorrect

3-21. Which of the following statements is not true about planning cash flow in projects ?
A. Calculating incremental cash flow in projects
B. Including opportunity cost
C. Including sunk cost
D. Including effects that increase or loss of cash flow in other projects

3-22. Period of cash flow in bonus projects

A. Month
B.Year
C. Quarter
D. Day

3-23. When does the project cash flow arise ?

A. Beginning of term
B. At the end of term
C. Any time in term
D. All answers incorrect

3-24. Why do they choose finished time to divide cash flow in projects ?
A. To separate investment cash flow from operating cash flow in projects
B. To convenient when identify cash inflow and cash outflow
C. A and B correct
D. A and B incorrect

3-25. Cash flow in projects includes

A. Operating cash flow
B. Investment cash flow
C. Funding cash flow
D. All answers correct

3-26. Operating cash flow is cash inflow and cash outflow for
A. Producing and supplying output product in projects
B. Investing
C. Raising capital
D. Funding
3-27. Investment cash flow is cash inflow and cash outflow for
A. Investing in real assets in projects
B. Investing in fixed assets in projects
C. Investing in financial assets in projects
D. Investing in assets in projects

3-28. Funding cash flow is cash inflow and cash outflow for
A. Raising debt capital in projects
B. Raising equity in projects
C. Raising internal capital in projects
D. Raising external capital in projects

3-29. Paying for material suppliers is noted in

A. Operating cash flow
B. Investment cash flow
C. Funding cash flow
D. All answers incorrect

3-30. Liquidation of fixed assets is noted in

A. Operating cash flow
B. Investment cash flow
C. Funding cash flow
D. All answers incorrect

3-31. Paying loan interest costs is noted in

C. Funding cash flow

3-32. Which of the following changes decreases net operating cash flow in projects ?
D. Increasing minimum balance

3-33. Equity capital for projects is noted in

A. Operating cash flow
B. Investment cash flow
C. Funding cash flow
D. All answers incorrect

3-34. Which of the following items in Equity Point of View - Stockholders (EPV) ?
D. Opportunity costs of land

3-35. Which of the following appraisal viewpoints is a financial viewpoint ?

A. All Equity Point of View (AEPV)
B. Total Investment Point of View - Banks (TIPV)
C. Equity Point of View - Stockholders (EPV)
D. All answers correct

3-36. Project Cash Flow from the All Equity Point of View (AEPV) measures the financial
performance of the project for:
C. Investor

3-37. Project cash flow from the Total Investment Point of View (TIPV) measures the financial
performance of the project for:
D. Owners and banks

3-38. Project Cash Flow from the Equity Point of View (EPV) measures the financial performance of
a project for:
A. Owner

3-39. Project Cash Flow from the All Equity Point of View (AEPV) is the project's cash flow in the
case of
A. Debt-free project
3-40. Project cash flow from the Total Investment Point of View (TIPV) is the project’s cash flow in
the case of
B. Projects with debt and using equity

3-41. Project cash flow from the Equity Point of View (EPV) is the project's cash flow in the case of
C. Project after paying off debt to sponsor

3-42. Choose the correct statement.

A. Cash flow (AEPV) does not take into account the benefit of tax shield from interest, while cash
flow (TIPV) takes into account the benefit of tax shield from interest.
B. Cash flow (AEPV) takes into account the tax shield benefit from interest while cash flow (TIPV)
does not take into account the tax shield benefit from interest
C. Both cash flows (AEPV) and (TIPV) take into account the tax shield benefit from
D. Both cash flows (AEPV) and (TIPV) do not take into account the tax shield benefit from interest.

3-43. Net cash flow from the All Equity Point of View (AEPV) is determined by:
A. Operating cash flow (without tax shield) + Investing cash flow
B. Total Investment Net Cash Flow (TIPV) – Tax Savings by Interest
C. Net Cash Flow Equity (EPV) + Tax Savings from Interest – Financing Cash Flow
D. All of the above answers are correct

3-44. Net cash flow from the Total Investment Point of View (TIPV) is determined by:
A. Operating cash flow (with tax shield) + Investing cash flow
B. Net Cash Flow Total Equity + Tax Savings from Interest
C. Net Cash Flow Equity - Financing Cash Flow
D. All of the above answers are correct

3-45. Net cash flow from the Equity Point of View (EPV) is determined by:
A. Operating cash flow (with tax shield) + Investing cash flow + Financing Cash Flow
B. Net Cash Flow from Total Investment Point of View (TIPV) + Financing Cash Flow
C. Operating cash flow (without tax shield) + Investing cash flow + Tax shield + Financing Cash
Flow
D. All of the above answers are correct.
3-46. If the symbol EBIT is profit before tax and interest; NOPAT is operating income after tax, BAT
is income after tax; Dep is depreciation cost; Int is interest expense; TS is tax savings due to debt and
ΔWC is working capital change, which of the following formula is the formula for determining
operating cash flow (with tax shield) from interest?
B. EAT + Dep + Int - ΔWC

3-47. Given EBIT as earnings before interest and taxes, NOPAT as net operating profit after tax, EAT
as earnings after tax, Dep as depreciation expense, Int as interest expense, TS as tax shield from debt,
and WC as working capital, which of the following formulas determines the operating cash flow
(excluding tax shield) from interest?
A. NOPAT + Dep - ΔWC

3-48. The working capital requirement during the project's operational phase refers to the working
capital:
A. Minimum required to sustain normal project operations.

3-49. Which of the following cash flows can be prepared using the direct method?
A. Operating cash flow
B. Investing cash flow
C. Funding cash flow
D. All of the above

3-50. Which of the following cash flows can be prepared using the indirect method?
A. Operating cash flow

3-51. Which of the following cash flows can be prepared using the direct method?
A. Net cash flow from the perspective of Total Equity (AEPV)
B. Net cash flow from the perspective of Total Investment (TIPV)
C. Net cash flow from the perspective of Equity (EPV)
D. All of the above

3-52. Which of the following cash flows can be prepared using the indirect method?
A. Net cash flow from the perspective of Total Equity (AEPV)
B. Net cash flow from the perspective of Total Investment (TIPV)
C. Net cash flow from the perspective of Equity (EPV)
D. All of the above

3-53. The purpose of creating intermediate spreadsheets in the project cash flow planning process is
to:
A. Forecast the project's working capital
B. Evaluate the project's debt repayment ability
C. Calculate annual income tax
D. Establish the project's cash flow

3-54. What is the impact of depreciation expense on a project's cash flow or income?
A. Decreases the project's cash flow by the annual depreciation expense
B. Increases the project's cash flow by the annual depreciation expense
C. Decreases taxable income by the annual depreciation expense
D. Increases taxable income by the annual depreciation expense

3-55. Which of the following depreciation methods increases a project's operating cash flow,
assuming no indirect impact through income tax?
A. Straight-line
B. Declining balance
C. Units of production
D. None of the above methods can increase the project's operating cash flow

3-56. Changing the depreciation period and method will:

A. Directly affect the project's cash flow
B. Indirectly affect the project's cash flow
C. Both directly and indirectly affect the project's cash flow
D. Neither directly nor indirectly affect the project's cash flow

3-57. Choose the correct statement.

A. Interest expenses during the project's operating period is not included in cash outflow from
operating activities.
B. Interest expenses during the project's operating period is included in cash outflow from operating
activities.
C. Interest expenses during the construction period with a grace period is included in cash outflow
from financing activities.
D. Interest expenses during the construction period without a grace period is not included in cash
outflow from financing activities.

3-58. Which of the following statements is correct when handling interest expenses incurred during
the project implementation period?
A. It is included in the total investment cost.
B. It is always capitalized into the principal for the next interest period.
C. It is considered the cash outflows when preparing the initial investment cash flow.
D. It is not capitalized in the initial cost of the fixed asset formed after the investment.

3-59. When interest expenses incurred during the construction period of a project is capitalized, which
of the following changes will occur?
A. Depreciation expense of fixed assets will increase.
B. Interest expense to be paid during the operating period will decrease.
C. Operating expenses before depreciation will increase.
D. The financial performance of the project will decrease.

3-60. Construction interest is recognized in the financing cash flow of a project when:
A. It is incurred during the construction period and capitalized
B. It is incurred during the construction period and is granted a grace period
C. It is incurred during the construction period and is not capitalized
D. It is incurred during the construction period and is added to the principal

3-61. Regarding loan interest during the construction period, which of the following statements is
true?
A. Loan interest during the construction period is an interest payable for construction financing.
B. Loan interest during the construction period is not included in the investing cash flow.
C. Loan interest during the construction period with grace period is not capitalized into the original
cost of fixed assets forming after investing.
D. Loan interest during the construction period with grace period is not included in total investment.

3-62. Capitalization of interest during construction period for expansion investment projects will:
A. Improve the income statement of the project company.
B. Reduce the income statement of the project company.
C. Does not affect the income statement of the project company.
D. Can not predict the changes of the income statement of the project company.

3-63. In a taxable environment, capitalizing interest during construction period for expansion
investment project
A. Increase the operating cash flow of the project company.
B. Decrease the operating cash flow of the project company.
C. Does not affect the operating cash flow of the project company.
D. Can not predict the changes of the operating cash flow of the project company.

3-64. Capitalization of interest during construction period for expansion investment projects will:
A. Increase interest expense and increase annual depreciation expense of the project.
B. Decrease interest expense and decrease annual depreciation expense of the project.
C. Increase interest expense and decrease annual depreciation expense of the project.
D. Decrease interest expense and increase annual depreciation expense of the project.

3-65. Which of the following statements about land residual value is correct?
A. The residual value of land at the beginning liquidation year is always equal to the initial cost.
B. The residual value of land at the beginning liquidation year is always equal to the market value at
the liquidation year.
C. Record all the profit or loss on disposal into the inflow.
D. All of the above statements are incorrect.

3-66. Choose the correct statement

A. In case the land used for a project (long - term) is a purchased land, the residual value is calculated
by the market price at the purchased year.
B. In case of capital contribution by the rights’ investors of using land (long - term), the residual value
is calculated as the case of purchased land.
C. In case the land used for a project is a leased land with annual payment, the project doesn’t have
residual value.
D. All of the above statements are correct.

3-67. The residual value of plant and machine is determined based on:
A. The remaining value of plant and machine at the beginning liquidation year in case it can’t be
valued by market price.
B. The remaining value of plant and machine at the ending year of project’s operation in case it can’t
be valued by market price.
C. The market price of plant and machine at the liquidation year is estimated by experts in case it can
be valued by market price.
D. All of the above statements are correct.
3-68. A company is considering investing in an expansion investment project. The company currently
owns a land with a market price of 120 billion dong and intends to use it for the project. If the project
is implemented, the cost of land purchase is:
A. The market value at the beginning of the project.
B. Equal 0 because land needn't be bought in this project.
C. The market value at the time of purchasing land.
D. The book value at the time of purchasing land.

3-69. Assess the debt repayment capacity of an investment project is based on:
A. Annual earnings after tax of the project.
B. Annual depreciation of the project.
C. Changes in working capital of the project.
D. Net operating cash flow of the project.

3-70. Regarding the DSCR, which of the following statements is true?

A. The capacity of the project's payment of both principal and interest if DSCR in all years > 0.
B. The capacity of the project's payment of both principal and interest if DSCR in all years > 1.
C. The capacity of the project's payment of both principal and interest if DSCR has at least one year >
0.
D. The capacity of the project's payment of both principal and interest if DSCR has at least one year >
1.
Group 4
4-19. How is the expected payback period of a project determined?
4-20. What is the acceptance principles for a project using the DPP (Discounted
Payback Period) criterion?
4-21. What are the common drawbacks of both PP (Payback Period) and DPP criteria?
4-22. What drawback of PP does DPP overcome?
4-23. What is the conflict between NPV (Net Present Value) and DPP when making a
project selection decision?
4-4. How to calculate PI (Profitability Index) and DPP in the case of a project with
reinvestment?
4-25. Why, when evaluating a project or choosing mutually exclusive projects, do
people have to calculate many evaluation criteria simultaneously?
4-26. Which evaluation criterion is the most reliable? Why?

4-1. NPV is defined as:

A. Net Present Value
B. Present value of operating cash flow minus the initial investment
C. Present value of cash flow after the discounted payback period
D. All of the above

4-2. The difference between the present value of cash inflows and cash outflows over
the life of a project is:
A. NPV
B. B/C
C. IRR
D. PP/DPP

4-3. Given the following cash flow:

If using MS-Excel, select the correct function to calculate NPV.

A. =NPV(B1,B3:E3)
B. =NPV(B1,C3:E3)+B3
C. =NPV(B1,B:D3)+E3
D. All of the above functions are incorrect

4-4. The principle of using the NPV criterion to evaluate independent investment
projects is:
A. Accept the project if the present value of operating cash flow is greater than the initial
investment
B. Accept the project only if NPV ≥ 0
C. Accept the project if NPV is non-negative
D. All of the above statements are correct

4-5. A project with NPV = 0 and a discount rate equal to the expected rate of return will
not be accepted because:
A. The project does not increase net assets
B. The project just barely covers the cost of capital
C. The project just meets the expected rate of return
D. All of the above reasons are incorrect

4-6. An investment project with an NPV of 0 means that:

A. The project breaks even
B. The present value of total revenue is equal to the present value of the total initial
investment
C. The rate of return on the project is equal to the cost of capital invested in the project
D. All of the above statements are correct

4-7. Predict which change will increase the NPV of a project, assuming all other
factors remain constant?
A. A decrease in the discount rate
B. A decrease in annual net cash flow
C. An increase in the initial investment
D. An increase in the project's lifespan

4-8. Identify the scenario where the project will be accepted?

A. NPV = 100 with a discount rate equal to the 12-month savings interest rate
B. NPV = 50 with a discount rate equal to the loan interest rate
C. NPV = 0 with a discount rate equal to the expected rate of return
D. All of the above cases will be accepted

4-9. Which of the following statements is a disadvantage of the NPV criterion?

A. Sensitive to the discount rate
B. NPV can only be calculated when the net cash flow has at least one negative value
C. A project can have multiple NPV values or no NPV can be calculated
D. All of the above statements are disadvantages of the NPV criterion

4-10. Which of the following statements is incorrect?

A. NPV always has a unique value
B. NPV is a multi-valued function of the discount rate
C. NPV has a positive relationship with the discount rate
D. NPV depends on the project's lifespan

4-11. Given a project where NPV inversely correlates with the discount rate, what will
be the NPV if the project's IRR is 15%?
A. Negative if the discount rate is 10%
B. Positive if the discount rate is 20%
C. Negative if the discount rate is 20%
D. Positive if the discount rate is 15%
4-12. The NPV of a project with an investment of 1,000$ discounted at a 15% rate is as
follows. In other words, the explanation can be described as:
A. The project generates a profit of 1,000$
B. The project generates a profit of 15% on the total investment capital invested in the
project
C. The project generates a 15% profit with 1,000$ at present value
D. The project increases the company's value by 1,000$

4-13. Which of the following statements about NPV is correct?

A. NPV > 0 means the project generates positive cash flow in all years (>0)
B. NPV > 0 means the project generates profit in all years (>0).
C. Selecting a project based on the NPV criterion provides better results than other criteria
when comparing projects with the same age and lifespans but different types.
D. NPV does not depend on the discount rate used for the project.

4-14. Summarize the result: If two projects have the same positive NPV value, then:
A. Both projects have the same internal rate of return
B. Both projects have the same investment payback time
C. Both projects increase the investor's value equally
D. Both projects are equally likely to generate profit

4-15. The NPV value for each year is built on a discount rate suitable for each year.
Called a discount rate for each year of the project's life cycle, the discounting system
for year i (where i = 1, n) is:
A. 1/(1+ri)
B. 1/(1+ri)i
C. 1/(1+ri)/(1+ri)/…/(1+ri);
D. 1/[(1+ri)(1+r2)…(1+ri)]

4-16. The discount rate at which the project's NPV equals 0 is:
A. WACC
B. IRR
C. MIRR
D. Re

4-17. Given 0 < r1 < r2 and the project's NPV as follows: NPV(r1) > 0 >
NPV(r2). Choose the correct expression:
A. r1 < r2 < IRR
B. r1 < IRR < r2
C. IRR < r1 < r2
D. IRR > r1 > r2

4-18. Given the following cash flow:

If using MS-Excel software, choose the correct function to calculate IRR.

A. =IRR(B3:E3)
B. =IRR(B3:E3; [0.1])
C. =IRR(B3:E3;[-0.1])
D. All functions are correct

4-19. The principle of using IRR to evaluate a project: When using IRR to evaluate the
value of a project, it is only accepted if IRR
A. ≥ ROE
B. ≥ The fixed deposit interest rate with risk compensation
C. ≥ The long-term loan interest rate
D. ≥ WACC

4-20. For a project to be accepted, the IRR of the net cash flow (TIPV) must be:
A. ≥ The savings interest rate
B. ≥ The average market loan interest rate
C. ≥ WACC before tax
D. ≥ WACC after tax

4-20: For a project to be accepted, the IRR of the net cash flow (TIPV) must be:
A. >= Savings interest rate
B. >= Average market borrowing interest rate
C. >= WACCBT
D. >= WACCAT

4-21: For a project to be accepted, the IRR of the net cash flow (AEPV) must be:
A. = Savings interest rate
B. >= Average market borrowing interest rate
C. >= WACCBT
D. >= WACCAT

4-22: For a project to be accepted, the IRR of the net cash flow (EPV) must be:
A. >= 12-month fixed deposit interest rate
B. >= Average long-term market borrowing interest rate
C. >= Expected (minimum) rate of return on equity
D. >= Expected (maximum) rate of return on equity

4-23: A project has an IRR of 20% and a cost of capital of 15%. This can be interpreted
as:
A. The project generates a 20% return on total investment
B. The project's rate of return is higher than the project's required rate of return
C. The project covers the cost of capital
D. All of the above interpretations are correct

4-24:Which of the following statements is always true?

A. If project A has a higher IRR than project B, then the NPV of project A is higher than B
B. If project A has a higher IRR than project B, then the NPV of project A is lower than B
C. For two mutually exclusive projects, investors should choose the project with the highest
IRR
D. All of the above statements are incorrect

4-25: Project A has NPV(A) = 389 and IRR(A) = 25%. Project B has the same lifespan
as project A and its cash flows in each year are double those of project A. The NPV
and IRR of project B are:
A. NPV(B)=389 and IRR(B)=25%
B. NPV(B) = 778 and IRR(B) = 50%
C. NPV(B) = 389 and IRR(B) = 50%
D. NPV(B) =778 and IRR(B) = 25%

4-26: MIRR is chosen to overcome which of the following disadvantages of IRR?

A. No IRR
B. Multiple IRRs
C. IRR assumes that cash flows generated annually from the project are reinvested at the
IRR
D. Overcomes all three disadvantages of IRR

4-27: Given a specific net cash flow, predict the value of MIRR compared to IRR:
A. MIRR < IRR
B. MIRR > IRR
C. MIRR = IRR
D. Depends on the discount rate and internal rate of return of the project

4-28: A project has two internal rates of return: IRR1 = 20% and IRR2 = 30%. If the
cost of capital of the project is 25%,the evaluator will:
A. Accept the project
B. Reject the project
C. Use the MIRR criterion to evaluate the project
D. Cannot evaluate this project

4-29: The profitability index (PI) explains:

A. How many dollars of revenue are generated for every dollar of initial investment
B. How many dollars of revenue are generated after deducting the cost of capital for every
dollar of initial investment
C. How many dollars of current revenue are generated after deducting the cost of capital for
every dollar of initial investment
D. All of the above explanations are incorrect

4-30. The project's operating cash flow discounted to its present value in the PI
standard:
A. Always positive
B. Always negative
C. May be positive or negative
D. Undetermined

4-31. Which of the following statements about the payback period is incorrect?
A. The payback period often leads to accurate conclusions.
B. Investors should accept projects with a payback period shorter than the expected
payback period.
C. The payback period does not consider cash flows after the payback period.
D. The payback period does not consider the time value of money.

4-32. Which of the following statements is correct about calculating the payback
period (PP)?
A. The payback period considers all cash flows over the life of the project.
B. The payback period considers all cash flows before the payback period.
C. The payback period considers all cash flows after the payback period.
D. The payback period considers the time value of money.

4-33. Which of the following statements is incorrect about the payback period?
A. The payback period often leads to accurate conclusions about the financial viability of a
project.
B. Investors should accept projects with a payback period shorter than the target payback
period set by the investor.
C. The payback period does not consider cash flows after the payback point.
D. The payback period does not take into account the time value of money.

4-34. A project has a negative net cash flow in year 0 and positive cash flows in all
subsequent years. Given that the discounted payback period (DPP) of the project is 3
years and 6 months, choose the correct expression below:
A. NPV ≥ 0
B. DPP > PP
C. DPP < Project’s lifespan
D. All of the above expressions are correct
4-35: Choose the correct statement.
A. When the project's lifespan increases, the NPV always increases.
B. IRR is the minimum rate of return of the project.
C. B/C is calculated by comparing benefits to initial investment and operating costs.
D. DPP has a positive correlation with the discount rate.

4-36: If the project's NPV is greater than 0, which of the following statements is
correct?
A. PP > DPP > the project's lifespan.
B. PP < DPP < the project's lifespan.
C. DPP > PP > the project's lifespan.
D. DPP < PP < the project's lifespan.

4-37: Which of the following criteria does not consider the time value of money?
A. NPV (Net Present Value)
B. PP (Payback Period)
C. PI (Profitability Index)
D. IRR (Internal Rate of Return)

4-38: When selecting mutually exclusive projects with different lifespans, which
criterion should we use?
A. NPV of the project
B. IRR of the project
C. PP or DPP of the project
D. EAA of the project (Equivalent Annual Annuity)

4-39: Which of the following expressions is correct for a cash flow that changes sign
only once from negative to positive?
A. NPV > 0  IRR > 1
B. NPV > 0  IRR < WACC
C. PI > 1  IRR > WACC
D. NPV > 0  PI > 0

4-40: Company X is considering two investment projects. Both projects have the
same initial investment and similar cash flow patterns. The first project has a 10-year
lifespan, and the second one is 20 years. Which criterion is most suitable for ranking
these two projects?
A. Net Present Value (NPV)
B. Internal Rate of Return (IRR)
C. Profitability Index (PI)
D. None of the above criteria is correct

4-41: Choose the correct statement from the following:

A. A project with a 1-year payback period always has a positive NPV (NPV > 0)
B. When IRR<WACC then NPV>0
C. NPV and IRR can lead to conflicting decisions when selecting mutually exclusive projects.
D. NPV > 0 indicates that the project generates positive annual profits.
4-42: Choose the incorrect statement from the following:
A. NPV and IRR can lead to conflicting decisions when selecting independent projects.
B. One of the drawbacks of NPV is its dependence on the chosen discount rate.
C. To reflect the financial feasibility of the project itself, assets should be liquidated at market
value in the project's termination year.
D. Under the same conditions, projects with shorter payback periods have lower risk than
projects with longer payback periods.

4-43: A project has a 10-year lifespan and a 10-year simple payback period. Which of
the following statements is correct?
A. NPV < 0
B. PI > 1
C. IRR > r
D. DPP < 10 years

4-44: A project has a negative net cash flow in year 0 and positive cash flows in
subsequent years. Given that the project cannot recover its initial investment based
on the discounted payback period, the project has:
A. NPV < 0
B. IRR > r
C. PI > 1
D. PP > DPP

4-45: If projects A and B have equal lifespans and project A has annual cash flows
that are double those of project B, which of the following statements is correct?
A. NPV(A) = 2 NPV(B)
B. IRR(A) = 2 IRR(B)
C. MIRR(A) = 2 MIRR(B)
D. PP(A) = 2 PP(B)

CHƯƠNG 5

5-1. The capital cost of the project is also known as:

A. Project discount rate.
B. Expected rate of return of those providing capital for the project.
C. The project's barrier interest rate.
D. All of the above answers are correct.

5-2. The capital cost of the project is determined by:

B. Expected rate of return of those providing capital for the project.

5-3. The capital cost of the project depends on:

A. Risk of the assets being financed.

5-4. Which of the following statements is correct about the discount rate of
investment projects?
A. The discount rate is a rate that converts the future value of a project's cash
flows to the present.
B. The discount rate is adjusted according to project risk.
C. The discount rate is the opportunity cost of the financial resources financing
the project.
D. All of the above answers are correct.

5-5. Lợi nhuận kỳ vọng của nhà đầu tư phản ánh yếu tố:
A. Real interest rate.
B. Expected inflation.
C. Risk surcharge.
D. All three factors above.

5-6. The reason it is necessary to discount the project's cash flows at the
cost of capital is:
C. Due to money has value over time.

5-7. The cost of capital for a project include:

C. Cost of both debt and equity capital.

5-8. The cost of debt for a project includes:

A. Cost of borrowing from bank loans.
B. Cost of issuing bonds.
C. Both A and B are correct.
D. Both A and B are incorrect.

5-9. The cost of equity for a project includes:

A. Cost of retained earnings.
B. Cost of common stock.
C. Cost of preferred stock.
D. All of the above are correct.
5-10. The cost of capital for any source of capital used in the project will
be:
A. The required rate of return of the investor.
B. The required rate of return of the investor adjusted for issuance costs.
C. The required rate of return of the investor adjusted for issuance costs. and
income taxes.
D. All of the above are correct

5-11. The capital structure of the project includes:

A. Long-term interest-bearing sources of capital used in the project

5-12. To estimate the cost of debt in order to calculate the cost of capital
from the investor's perspective, we use:
D. After-tax yield to maturity.

5-13. A company is planning to issue bonds to raise capital for a project.

The bond has a maturity period of 3 years and is sold at a par value of
1,000,000 VND. The nominal interest rate of the bond is 12% per year, and
interest is paid annually. The bond interest is tax-deductible at a rate of
20%. The issuance cost is 6% of the funds raised from the bonds. The cost
of debt for this bond is:
C. 14,61%

5-14. A company is planning to issue bonds to raise capital for a project.

The bond has a maturity period of 3 years and is sold at a par value of
1,000,000 VND. The nominal interest rate of the bond is 12% per year, and
interest is paid semi-annually. The bond interest is tax-deductible at a rate
of 20%. The issuance cost is 6% of the funds raised from the bonds. The
cost of debt for this bond is:
C. 11,63%

5-15. A company plans to use debt to finance the implementation of a

project. The current loan interest rate is 12% per year, and the interest
payments are tax-deductible at a tax rate of 20%. The borrowing cost for
the 12% interest rate is calculated based on the loan amount. The cost of
debt for this loan is:
A. 9,8%
5-16. A company plans to issue preferred shares to finance a project. The
preferred shares have a par value of 10,000 VND and are sold at a price of
9,000 VND per share. The dividend rate is fixed at 1,200 VND per share
annually, and the dividend is paid indefinitely. The issuance cost is 6% of
the funds raised from the preferred shares. The cost of capital for these
preferred shares is:
C. 14,18%

5-17. The cost of capital for preferred shares is:

B. Not tax-deductible.

5-18. Compared to the cost of debt, the cost of capital for preferred shares
is:
A. Higher.

5-19. The difference between the cost of retained earnings and new
common stock issuance is:
A. Issuance cost.

5-20. When calculating the cost of equity using the Capital Asset Pricing
Model (CAPM), the risk-free rate is represented by:
D. rf

5-21. When applying the Capital Asset Pricing Model (CAPM) to estimate
the expected return on equity, the risk-free bond return rate should be
selected as.
D. The average yield on treasury bonds maturing at the same time as the project.

5-22. When estimating the cost of equity for a project using the CAPM
model, the market risk premium is represented by:
B. (rm - rf)

5-23. When estimating the cost of equity for a project using the CAPM
model, the market risk premium is measured by:
C. The expected future difference between the market portfolio return and
treasury bonds.
5-24. In the Capital Asset Pricing Model (CAPM), the project risk relative
to the market portfolio is expressed by the parameter:
C. βi
5-25. The beta of an asset with tax deductions on interest is calculated using
the formula:
C. βa /[1+(1-t)D/E)]

5-26. A company has a debt ratio of 40% and a beta of 1.25. If the income
tax rate is 20%, what is the asset beta of this business?
B. 0,82

5-27. Estimate the project's cost of equity using the CAPM. The asset beta
is estimated by calculating:
B. The average beta of comparable single-industry companies.

5-28. A company plans to invest in a new project to expand its market

share. The company finds two comparable companies in the same industry
with asset betas (unlevered) of 0.6 and 0.8, respectively. The unlevered
asset beta of the project is:
B. 0.7

5-29. The equity beta of the project with tax deductions on interest is
calculated using the formula:
D. βe.[1+(1-t)D/E]

5-30. A project has an estimated average asset beta of 1.1 from similar
companies. If the project's debt ratio is 70% and the corporate tax rate is
20%, the project's equity beta is:
C. 1.61

5-31. A company plans to use retained earnings to finance an investment

expansion project. This project has a risk level similar to that of a company
in the same industry, with an unlevered asset beta of 1.2. The debt-to-
equity structure of the project is 6:4. If the corporate tax rate is 20%, the
equity beta of the project is:
D. 2,64%
5-32. Estimate the project's cost of equity using CAPM, where the asset
risk premium represented by the following factors:
A. βi
B. (rm - rf )
C. βi.(rm - rf )
D. rf +βi.(rm - rf )

5-33. A company plans to use retained earnings to implement an expansion

investment project. Knowing that the yield to maturity of Treasury bonds
is 6% per year, the equity beta is 1.5, and the market risk premium is 7%,
the cost of equity for this project is:
A. 7,5%
B. 10,5%
C. 14,5%
D. 16,5%

5-34. Indicate the disadvantages of using the industry average return to

estimate the expected return on equity for a project:
A. It does not reflect the risk from the company's capital structure.
B. It is only limited to a few key industries.
C. Discrete data is difficult to compile over the years.
D. All of the above are correct.

5-35. When applying CAPM to estimate the expected rate of return on

equity in underdeveloped financial markets, it is possible that:
A. There is no company in the same business field.
B. The selected stock portfolio does not reflect market fluctuations.
C. The data is short and incomplete.
D. All of the above are correct.

5-36. The expected rate of return of project owners is always higher than
the required rate of return of the creditors because:
A. The proportion of equity capital is higher than the proportion of debt.
B. Owners receive a tax shield from debt.
C. Owners bear more risk than creditors.
D. The effect of inflation.
5-37. If WACCBT denotes the pre-tax cost of capital, WACC AT denotes the
after-tax cost of capital; kd is the debt interest rate; ke is the expected rate
of return on equity; %D is the debt weight, %E is the equity weight, and t
the corporate income tax rate, then the net cash flow from the Total
Investment Perspective Value (TIPV) will be discounted at the rate:
A. ke
B. WACCAT = %D.kd (1 - t) + %E.ke +...
C. WACCBT = %D.kd + %E.ke +...
D. All of the above are incorrect

5-38. A project has a pre-tax cost of debt 10% and a cost of equity of 15%.
The project's capital structure consists of 60% debt and 40% equity. The
corporate tax rate is 20%. The discount rate for the TIPV cash flow is:
A. 10,8%
B. 12%
C. 15%
D. All of the above are incorrect.

5-39. If the symbol WACCBT is the pre-tax cost of capital; the after-tax cost
of capital is WACCAT; kd is the cost of debt; k e is the expected rate of
return on equity; %D is propotion of debt,and %E is propotion of equity, t
is the corporate income tax rate, then the net cash flow from All-Equity
point of view (AEPV) will be discounted at a rate of:
A. kd
B. WACCBT = %D.kd + %E.ke
C. WACCAT = %D.kd(1-T) + %E.ke + …
D. All of the above answers are incorrect.

5-40. A project has a pre-tax debt cost of 10% and an equity cost of 15%.
The capital structure of the project is 60% debt and 40% equity. The
project’s income tax rate is 20%. The after-tax cash flow discount rate
(AEPV) for the project is:
A. 10,8%
B. 12%
C. 15%
D. All of the above answers are incorrect.
5-41. If the symbol WACCBT is the pre-tax cost of capital; the after-tax cost
of capital is WACCAT; rd is the cost of debt; re is the expected rate of return
on equity; %D is propotion of debt, and %E is propotion of equity, t is the
corporate income tax rate, then the net cash flow from Equity owner point
of view (EPV) will be discounted at a rate of:
A. kd
B. WACCBT = %D.kd + %E.ke
C. WACCAT = %D.kd(1-T) + %E.ke + …
D. All of the above answers are incorrect.

5-42. A project has a pre-tax debt cost of 10% and an equity cost of 15%.
The capital structure of the project is 60% debt and 40% equity. The
project’s income tax rate is 20%. The EPV cash flow discount rate for the
project is:
A. 10,8%
B. 12%
C. 15%
D. All of the above answers are incorrect.
5-43. If the symbol WACCBT is the pre-tax cost of capital, the after-tax cost
of capital is WACCAT, and ke is the equity cost of capital, which of the
following expressions is correct?
A. WACCBT ≥ WACCAT ≥ ke
B. WACCAT ≥ WACCBT ≥ ke
C. ke ≥ WACCBT ≥ WACCAT
D. ke ≥ WACCAT ≥ WACCBT
5-44. Which of the following statements is correct when discussing
WACCAT?
A. Increasing the level of debt usage rate is always decreasing the project’s
WACCAT.
B. the level of debt usage rate does not affect the project's WACC AT in a tax
environment.
C. The higher the risk level of a project, the higher the project’s WACC AT.
D. The WACCAT function is a linear function.

5-45. A corporation has to estimate the cost of capital for two business
segments: kerosene and natural gas. The capital structure of the kerosene
project is 80% debt and 20% equity. The capital structure of the natural
gas project is 60% debt and 40% equity. The after-tax debt cost for both
business segments is 10%. The equity cost for the kerosene project is 13%,
and for the natural gas project is 14%. The WACC for these two business
segments is:
A. 10,6% and 11,2%
B. 10,6% and 11,6%
C. 10,6% and 10,8%
D. All of the above answers are incorrect.