Exam 10: Capital Budgeting Decision Methods

Which of the following is true about the net present value method?

If a project is normal, which of the following is true for a project with an internal rate of return exceeding the required rate of return?

Which of the following is not true of the payback period method?

A capital budgeting project is expected to have the following cash flows: What is the project's payback period?

Which of the following is true for a project with an expected net present value of $200,000?

Which one of the following capital budgeting decision methods measures how long it takes for a project's benefits to recover the project's cost?

A capital budgeting project has a net investment of $450,000 and is expected to generate net cash flows of $150,000 annually for 5 years. What is the net present value at a 15% required rate of return?

A capital budgeting project is expected to have the following cash flows: What is the project's net present value at an 18% required rate of return?

If a project's net present value is positive negative), the project is generally acceptable unacceptable).

If a capital budgeting project's cash flows are not normal, the internal rate of return method should be used to make the investment decision.