1. Which of the following statements is correct?

a. The Payback Period method tells us the amount by which the benefits from a capital expenditure exceed its costs.

b. There is a strong economic rationale that links the payback method to stockholder value maximization.

c. If a capital project has a negative NPV, the value of the expected cash flows from the project is less than its cost.

d. All the answers are correct.

e. The IRR calculation is similar to the ordinary payback calculation except that the future cash flows are discounted by the cost of capital.

2. Which of the following statements is correct?

a. The Payback Period method tells us the amount by which the benefits from a capital expenditure exceed its costs.

b. There is a strong economic rationale that links the payback method to stockholder value maximization.

c. If a capital project has a negative NPV, the value of the expected cash flows from the project is less than its cost.

d. All the answers are correct.

e. The IRR calculation is similar to the ordinary payback calculation except that the future cash flows are discounted by the cost of capital.