1. Why is net present value (NPV) our preferred criteria for making investment decisions?

A. It accounts for the time value of money

B. It accounts for the risk of cash flows

C. It provides an indication about the expected change in firm value from taking the project

D. It can be used to rank projects

E. All of the above

2) If two annuities have identical features except that one is an ordinary annuity while the other is an annuity due, which of the following statements is true? bet be

A. The ordinary annuity has a larger present value. B. The annuity due has a larger present value.

C. Their present values are the same.

D. We need more information to answer this question.

E. It depends on the risk-free rate in the economy.