A firm should never accept a project if its acceptance would lead to an increase in the firm's cost of capital (its WACC.)

a. True b. False

2 Because "present value" refers to the value of cash flows that occur at different points in time, a series of present values of cash flows should not be summed to determine the value of a capital budgeting project.

a. True b. False

3 The IRR method is based on the assumption that projects' cash flows are reinvented at the project's risk-adjusted cost of capital

a. True b. False

4 One advantage of the payback method for evaluating potential investments is that it provides information about a project's liquidity and risk.

a. True b. False