The net present value (NPV) capital budgeting decision method: can be directly compared between alternatives incorporates the time value of money in the calculations is based on accounting net income indicates an acceptable capital pro
1. The
can be directly compared between alternatives
incorporates the time value of money in the calculations
is based on accounting net income
indicates an acceptable capital project with a negative value
2. On a capital project, a net present value of ($250):
indicates the capital project s
for one project is considered superior to another project with a net present value of $500
indicates the
indicates
3. A 13% internal rate of return (IRR) on a capital project indicates all of the following except:
the actual rate of return of all
that a 13% discount rate will result in the calculation of a net present value of zero
a better indication of acceptable capital projects when there is limited capital than the net present value method
an acceptable capital project if the cost of capital is 14%
4. Which of the following indicates an unacceptable capital project
The internal rate of return exceeds the cost of capital.
The net present value of a project is 10.
The profitability index of a project is 0.97.
The accounting rate of return exceeds the target rate of return.
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