https://sakal.uri.edu/a payback period of three years. Which one of the following RI:2189-B 1. A project statements is correct concerning the payback analysis of this project? The cash flows in each of the three years must exceed one-third of the project's initial cost if the project is to be accepted The cash flow in year three is ignored. The cash flow in year two is valued just as highly as the cash flow in year one. The project is acceptable whenever the payback period exceeds three years. a. b. c. d. 2. The M & M Proposition I supports the theory that a firm's weighted average cost of capital decreases as the firm's debt-equity ratio increases. the value of a firm is inversely related to the amount of leverage used by the firm. a firm's weighted average cost of capital stays constant as the firm's debt-equity ratio increases. a firm's cost of equity increases as the debt-equity ratio of the firm decreases. a. b. c. d. 3. Day Interiors is considering a project with the following cash flows. What is the IRR of this project? $114,600 35,900 50,800 45,000 a. 6.42% b. c. d. 7.0390 7.48% 8.22% 4. Kelley's Baskets makes handmade baskets for distribution to upscale retail outlets. The firm is currently considering making handmade wreaths as well. Which one of the following is the best example of an i tal operating cash flow related to the wreath project? storing supplies in the same space currently used for materials storage utilizing the basket manager to oversee wreath production hiring additional employees to handle the increased workload should the firm accept the wreath project planning on lower interest expense by assuming the proceeds of the wreath sales will be used to reduce the firm's currently a. b. c. d. ding debt