Answer True or False

1. The accounting rate of return is the only method that focuses on net income rather than cash flow.

2. The net present value method compares a project's future net income to the initial investment.

For # 2- My textbook says that the net present value compares the present value of future cash flows to the original investment.

So my other question is.. Is net income the same as future cash flows?

3. When deciding between mutually exclusive investments, a manager should choose the option with the lowest depreciation.

4. When managers must choose among independent projects, they should prioritize projects according to their net present value.

5. Sensitivity analysis helps determine whether changing the underlying assumptions would affect the decision.