1. As a result of the decision to buy new equipment or to go into a new project, old assets should be disposed of, and the proceeds of such disposal are treated as a reduction from the cost of the new investment.

True

False

2. For a project to be acceptable, the internal rate of return of the project must be greater than the cost of capital.

True

False

3. A positive net present value indicates that the project's return is less than the discount rate.

True

False

4. As a result of the decision to buy new equipment, all costs avoided are treated as an addition to the cost of the new equipment to get the net investment cost.

True

False

5. It is the primary objective of financial managers to utilize the funds of the company within the limits of their authority so that in the long run, the company receives at least a higher rate to return on its investment as might be obtained.

True

False

6. The internal rate of return is the true rate of return of an investment project over its useful life.

True

False

7. The basic premise of the payback method is that the more quickly the cost of an investment can be recovered, the more desirable is the investment.

True

False

8. Net present value (NPV) and internal rate of return (IRR) can reduce conflicting conclusions when a choice is being made between mutually exclusive projects, and when conflicts occur, the IRR is generally better.

True

False

9. As a result of the disposal of an old asset, a tax savings or tax shield will be realized if there is a gain.

True

False

10. If the projects are mutually exclusive, the acceptance of one project does not affect the acceptance of rejection of the other projects.

True

False

Please select the correct response from 1 to 10.