You should accept a project when the ?: net present value is negative. profitability index is positive. payback period exceeds the required period. AAR is greater than the required return. 7. Which one of the following statements is correct? The payback period is also referred to as the benefit-cost ratio. The internal rate of return can be reliably used for all independent projects. The profitability index is used when the investment funds are limited. The net present value should not be used to rank mutually exclusive projects. 8. You should accept a project when the ?: net present value is negative. profitability index is less than 1 but greater than 0. discounted payback period is less than the required period. AAR is less than the required return. 9. The crossover point ? : is used to determine which one of two internal rates of return for a project should be used when determining if a project should be accepted. 2. is the point where the net present value of a project is equal to 0. 3. equates the net present values of two separate projects. 4. is the point in time when a project pays back on a discounted basis. 10. Which one of the following statements is correct? The payback period of a project will be longer than the discounted payback period. The internal rate of return can be reliably used for all independent projects. The internal rate of return is used to evaluate different sized projects. The internal rate of return should not be used to rank mutually exclusive projects.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 13MC

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You should accept a project when the ?:

net present value is negative.
profitability index is positive.
payback period exceeds the required period.
AAR is greater than the required return.

7. Which one of the following statements is correct?

The payback period is also referred to as the benefit-cost ratio.
The internal rate of return can be reliably used for all independent projects.
The profitability index is used when the investment funds are limited.
The net present value should not be used to rank mutually exclusive projects.

8. You should accept a project when the ?:

net present value is negative.
profitability index is less than 1 but greater than 0.
discounted payback period is less than the required period.
AAR is less than the required return.

9. The crossover point ? :

is used to determine which one of two internal rates of return for a project should be used

when determining if a project should be accepted.

2. is the point where the net present value of a project is equal to 0.

3. equates the net present values of two separate projects.

4. is the point in time when a project pays back on a discounted basis.

10. Which one of the following statements is correct?

The payback period of a project will be longer than the discounted payback period.
The internal rate of return can be reliably used for all independent projects.
The internal rate of return is used to evaluate different sized projects.
The internal rate of return should not be used to rank mutually exclusive projects.

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