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1. The length of time a firm must wait to recoup, in present value terms, the money it has in invested in a project is

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1. The length of time a firm must wait to recoup, in present value terms, the money it has in invested in a project is referred to as the A. net present value period. B. internal return period. C. payback period. D. discounted profitability period. E. discounted payback period 2. The internal rate of return is defined as the: A. maximum rate of return a firm expects to earn on a project. B. rate of return a project will generate if the project in financed solely with internal funds. C. discount rate that equates the net cash inflows of a project to zero. D. discount rate which causes the net present value of a project to equal zero. E. discount rate that causes the profitability index for a project to equal zero. 3. Isaac has analyzed two mutually exclusive projects of similar size and has compiled the following information based on his analysis. Both projects have 3-year lives. Net present value Payback period Average accounting return Required return Required AAR Project A $81,406 2.48 years 9.58 percent 11.5 percent 9.25 percent Project B $82,909 2.31 years 9.53 percent 12.0 percent 9.25 percent Isaac has been asked for his best recommendation given this information. His recommendation should be to accept: A. both projects. B. project B because it has the shortest payback period. C. project B and reject project A based on their net present values. D. project A and reject project B based on their average accounting returns. E. neither project fummiot with the following cash flows if the required rate of return is 12 percent

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