1. If the internal rate of return is greater than the required rate of return

	a.	the project should be accepted.
	b.	a higher discount rate should be used.
	c.	the payback period will be less than one year.
	d.	the project should be rejected.

2. Which of the following statements about the payback period method is not true?

	a.	All other things being equal, a company would prefer a project with a short payback period.
	b.	The payback period method ignores the time value of money.
	c.	The payback period method is more sophisticated and yields better decisions than the internal rate of return method.
	d.	The payback period method does not take into account the total stream of cash flows.

3. The cost of capital is the weighted average of

	a.	fixed and variable costs.
	b.	incremental cash inflows and outflows.
	c.	debt and equity financing.
	d.	net present value and internal rate of return.