chapter 21 t/ f quiz

managers prefer projects with higher IRRs to projects with lower IRRs, if all other things are equal

true

the NPV method calculates the expected monetary gain or loss from a project by discounting all expected future cash inflows and outflows back to the preseny point in time using the required rate of return

true

the net present value method can be used in situations where the required rate of return varies of the life of the project

true

8) the required rate of return(RRR) is set externally by creditors as the interest rate on long term liabilities

false

a capital budget spans only a one year period

false

discounted cash flow methods do not consider the present value of the cash flows after the recovery of the initial investment

false

discounted cash flow methods of evaluating capital expenditures focuses on the operating income as calculated under accrual accounting rules

false

in the identify projects stage of capital budgeting, companies gather information from all parts of the value chain to eliminate alternative projects

false

the discount rate used to calculate the NPV should be the interest rate that the company could borrow to finance the proposed project

false

the three common discounted cash flow methods are net present value, internal rate of return, and payback

false