Chapter 11: Capital Budgeting Assignment 1. Which of the following statements is CORRECT? The regular payback method recognizes all cash flows over a project's life. b. The discounted payback method does not solve all the flaws of the regular payback. The discounted payback method recognizes all cash flows over a project's life, and it also adjusts these cash flows to account for the time value of money. The regular payback method was, years ago, widely used, but virtually no companies even calculate the payback today. The regular payback does not consider cash flows beyond the payback year, but the discounted payback overcomes this defect. 2. Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT? a A project's IRR increases as the Weighted Average Cost of Capital (WACC) declines. b. A project's MIRR is unaffected by changes in the WACC. A project's regular payback increases as the WACC declines. A project's discounted payback increases as the WACC declines. A project's NPV decreases as the WACC increase. Which of the following statements is CORRECT? The IRR is generally regarded by academics as being the best single method for evaluating capital budgeting projects. b. The payback method is generally better than NPV method. c. Profitability index and NPV usually provide the same accept/reject results, although they do not necessarily rank acceptable projects in the same order. d. The MIRR is generally regarded by academics as being the best single method for evaluating capital budgeting projects. e. Both b and 4. Which of the following statements is INCORRECT? An NPV profile graph shows how a project's NPV varies as the cost of capital changes. b. Both NPV and IRR will not lead to conflicting decisions as long as the WACC is greater than the crossover rate and the projects are mutually exclusive. IRR is the interest rate that forces the present value of the cash inflows equal cost, and the NPV0. d. We must know the exact cost of capital to draw a particular project's NPV profile. cand d are incorrect Which of the following statements is CORRECT? If a project has more than one IRR, the highest IRR is the IRR of the project MIRR is more superior than IRR. The assumption of the IRR method is superior to the assumption of the NPV method. One of the reasons why NPV profile crossover is because of the project size or scale differences. band d Which of the following statements is CORRECT? The NPV method assumes cash flow