1.T, F. Preferred Decision is the choice made out of only three alternatives and which is implemented after justification by the decision-maker.

2.T, F. Screening decision is a choice made by management to assure itself that the proposed project or investment meets the maximum established hurdle.

3T, F. Post-audit is a process undertaken by companies to evaluate and document the outcome of an investment or project in order to learn its pitfalls or its successes during its implementation.

4. Accounting rate of return is:

a. Known also as simple rate of return

b. Obtained by dividing a projects or investments annual accounting net operating income by its initial investment or cash outlay

c Not a discounting rate d. All of the above e. None of the above.

5. T, F. The payback period and accounting rate of return are the two methods that do not use the time value of money in their analysis.

6. T, F. A bond is a debt instrument sold by a company to a long-term debtor. 7. T, F. A bond can be sold at a discount, premium or par. 8. T. F. When the market rate of interest associated with a bond is lower than the coupon rate on the bond, the bond must be sold at a premium when discounted. 9. T.F. When the coupon rate of a bond is lower than the market rate written on the bond, the bond must be sold at a discount when discounted.

16. T. F. The actual rate used for discounting bonds is the effective market rate or the coupon rate when the two rates are equal. 17. T, F. The effective market rate is what determines the amount of annuity paid to the creditor.