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1. T Net Present Value (or NPV) criteria for capital budgeting decisions assumes that expected he future cash flows are reinvested atand the Inte assumes

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1. T Net Present Value (or NPV) criteria for capital budgeting decisions assumes that expected he future cash flows are reinvested atand the Inte assumes that expected future cash flows are reinvested at- rnal Rate of Return (or IRR) criteria a. the firm's discount rate, the internal rate of return b. the internal rate of return, the internal rate of return c. the internal rate of return, the firm's discount rate d. neither criteria assumes reinvestment of future cash flows 2. The rate at which a project's Net Present Value is exactly equal to zero is known as the: a. Required rate of return b. Cost of capital c. Hurdle rate d. Internal rate of return 3. Project Boyaz is expected to generate $24,000 each year for the next four years. It will cost $60,000 to implement the project today. If the project's required rate of return is 12%, what is its profitability index? a. 1.21 b. .09 c. 0.96 d. 0.85 4. All else being held equal, if a company's transaction (flotation) costs associated with selling corporate securities increase, the company's cost of capital will: a. increase. b. decrease. c. stay the same. l of 5

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