Question

Which of the following statement is correct? Select one:

a. All the answers are incorrect.

b. A positive NPV means that the firm’s value will decrease if the project is adopted because the new project’s estimated return is lesst than the firm’s required rate of return.

c. Reject the project if the IRR is greater than or equal to the required rate of return.

d. Payback period is the discount rate that forces the NPV to equal zero.

e. All independent projects with NPVs greater than or equal to zero should be accepted because all such projects will add to the value to the firm.

Answer #1

Which of the following statement is incorrect? Select one:
a. When the internal rate of return is less than this required
rate of return, the project is rejected.
b. When NPV equals zero, the required rate of return, or
discount rate used in the NPV calculation, is greater than the
projected rate of return, IRR.
c. Most of the answers are correct.
d. The number of time periods it takes to cover the initial
investment is called the payback period....

Question text
Which of the following statements is INCORRECT?
Select one:
a. When choosing between mutually exclusive projects, managers
should accept all projects with IRRs greater than the weighted
average cost of capital.
b. For independent projects, the decision to accept or reject
will always be the same using either the MIRR method or the NPV
method.
c. One of the disadvantages of choosing between mutually
exclusive projects on the basis of discounted payback method is
that you might choose...

Which of the following statement is correct?
a. A firm should never accept the independent projects having
NPVs greater than zero.
b. All the answers are incorrect.
c. Because the net present value method does not factor in the
time value of money, nor the cash flows after the payback period,
its usefulness is limited.
d. Mutually exclusive projects are the projects that do not have
the same task and therefore they do not compete with each
other.
e. The...

Which one of the following is TRUE?
The NPV decision rule says to accept an investment if the NPV is
negative.
The IRR decision rule states that a project should be accepted
if its IRR exceeds the required return.
The discount rate that causes the net present value of a project
to equal zero is called the market rate.
IRR is superior to NPV for choosing between different
projects.
Payback ignores the project's cost.

Which of the following is statements related to capital
budgeting is not true? A project is considered acceptable if its
NPV is greater zero. A project whose NPV is greater than its IRR is
should be accepted. Both the NPV method and the IRR method of
evaluating capital investment projects are widely considered to be
superior to the payback method. An NPV of zero signifies that the
project's cash flows are just sufficient to repay the invested
capital and to...

Which of the following statement is correct? Select one:
a. Since the payback period method fails to look at the cash
flows beyond the payback period, it can lead to poor business
decisions.
b. A firm should never accept the independent projects having
NPVs greater than zero.
c. The capital budgeting projects may be about the purchase of
financial asset such as investing in stocks and bonds, futures, or
buying and selling T-bills.
d. The number of time periods it...

Which one is an incorrect statement?
Group of answer choices
a.Payback period is shorter for projects with positive NPVs than
negative NPVs
b.Cost only projects have no payback
c.Discounted payback period is always longer than payback
period
d.Payback method can rank projects differently than NPV
method

Which one of the following statements about inflation is
correct?
A.
The real rate of return accurately indicates how an investment
opportunity will change the investor's purchasing power.
B.
The greater the inflation rate is, the stronger the purchasing
power of a currency becomes.
C.
Deflation is highly desired because it immediately stimulates
consumption in an economy.
D.
When the expected inflation increases, the nominal interest
rates decline.
Which of the following statements about capital budgeting tools
are correct?
I....

Which of the following statements about capital investment
analysis is most correct?
A
Although a useful accounting concept, breakeven analysis has no
role in capital investment analysis.
B
Net present value (NPV) measures a project’s rate of return,
while internal rate of return (IRR) measures a project’s dollar
return.
C
An NPV of zero indicates that the project is expected to return
the amount of the initial investment, but it will
not provide a return on that investment.
D
On...

Which of the following statements is INCORRECT regarding
capital budgeting tools?
If the NPV is positive, the Profitability Index must be greater
than 1.
If the IRR is greater than the required return, then the NPV
will be positive.
The discounted payback period will always be smaller than the
payback period.
The NPV is the best capital budgeting tool, as a general
rule.

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