Investment Analysis Tools


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question 1 of 3

Which investment analysis tool calculates a rate of return based on a net present value of zero?

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1. Why is net present value an important investment analysis tool?

2. In investment analysis, what is the minimum payback period that should be accepted for an investment to be considered a good investment?

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About This Quiz & Worksheet

These assessments will test you on investment analysis tools, which are financial tools useful for recognizing good investment opportunities. Quiz questions will ask you about investment tools, payback periods and net present value.

Quiz & Worksheet Goals

These study tools focus on the following objectives

  • Identify the investment tool that calculates a rate of return based on a net present value of zero
  • Understand the importance of net present value
  • Explore the minimum payback period accepted for an investment to be considered good
  • Recall the information needed to calculate net present value
  • Examine the effectiveness of NPV, IRR, and payback period

Skills Practiced

This worksheet and quiz will help you practice the following comprehension skills:

  • Reading comprehension - ensure that you draw the most important information from the related corporate finance lesson
  • Information recall - access the knowledge you've gained regarding the usefulness of the net present value, IRR and payback periods
  • Knowledge application - use your knowledge to answer questions about using investment analysis tools to identify good investments

Additional Learning

You can find more information on investment analysis tools in the related lesson called Investment Analysis Tools. This lesson covers the following objectives:

  • Define vocabulary terms, such as operations, inflation and investment
  • Explore the purposes of net present value, internal rate of return and payback period
  • View examples of each investment analysis tool