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15. Of the 4 choices below, pick the answer that makes the most sense. If investment A has a payback period of 5 years and

15. Of the 4 choices below, pick the answer that makes the most sense. If investment A has a payback period of 5 years and investment B has a payback period of 3 years, then

a.

A is more profitable than B.

b.

B is more profitable than A.

c.

A & B are probably not equally profitable.

d.

A & B are probably equally profitable.

16. When a project has uniform cash inflows over its life, a management accountant would use the approach that you used in answering question 8 above.

However, when a project has non-uniform cash inflows over its life, a management accountant (as we did in class) may be forced to use ___________________ to find the project's internal rate of return.

A.

a screening decision in conjunction with the net present value method.

B.

a trial-and-error approach in conjunction with the net present value method.

C.

a sensitivity analysis approach in conjunction with the net present value method.

D.

a preference decision in conjunction with the net present value method.

17. Which method of evaluating capital projects assumes that cash inflows can be immediately reinvested in new projects at the hurdle rate?

a.

internal rate of return

b.

payback period

c.

net present value

d.

accounting rate of return

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