1) Which of the following circumstances might contribute to the usefulness of discounted payback method?

A- Uncertainty of project life

B- Multiple changes in the signs of cash flows

C- Mutually exclusive projects

D- Capital rationing

Q2 We compute profitability index of a capital budgeting proposal by

A- Multiplying the IRR By the cost capital

B- Dividing the present value of the annual after-tax cash flows by the cost of capital

C- Dividing the present value of the annual after-tax cash flows by the cost of the project

D- Multiplying the cash inflow by the IRR

Q3

6) Which of the following techniques places the greatest emphasis on cash flows received early in the life of a project

-A IRR

-B NPV

-C PI

-D Payback

Q4

When various capital budgeting techniques rank mutually exclusive projects differently which of the following is theoretically most reliable?

A- IRR

B- Equivalent annual cost

C- NPV

-D Discounted payback