8. Comparison of alternative decision criteria There are four principal decision models for evaluating and selecting investment projects: Net present value (NPV) Profitability index (PI) Internal rate of return (IRR) Payback period (PB) Which criteria assume that the project's net cash flows (NCFs) are reinvested at the firm's cost of capital? NPV and discounted PB NPV, PI, and discounted PB NPV Discounted PB Categorize the following statements whether they characterize the IRRINPV, PB, or PI decision criteria: Statement If its value is less than the firm's cost of capital, then the project should be rejected The ratio of the present value of the expected net cash flows over the life of the project to the net investment If its value is greater than or equal to zero, then the project should be accepted IRR NPV PB O PI O O O

8. Comparison of alternative decision criteria There are four prinaipal decision models for evaluating and selecting investment projects: - Net present value (NPV) - Profitability index (PI) - Internal rate of return (IRR) - Payback period (PB) Which criteria assume that the project's net cash flows (NCFs) are reinvested at the firm's cost of capital? NPV and discounted PB NPV, PI, and discounted PB NPV Discounted PB Categorize the following statements whether they characterize the IRRINPV, PB, or PI decision criteria