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If a company must choose between two mutually exclusive investment projects, the best general method to employ for decision-making purposes is: Cash-flow bailout Cash-flow break-even
- If a company must choose between two mutually exclusive investment projects, the best general method to employ for decision-making purposes is:
- Cash-flow bailout
- Cash-flow break-even
- Net Present value (NPV)
- Discounted payback
- Accounting (book) rate of return, based on average investment over the life of each project
- The profitability index (PI) is calculated as:
- Net present value (NPV) divided by average investment
- New present value (NPV) divided by initial investment
- Average investment divided by net present value (NPV)
- Initial investment divided by net present value (NPV)
- Effects of cash flows include direct effects which are changes in income-tax payments. True/False
- When using the project profitability index to rank competing investments projects, the preference rule is: the higher the project profitability index, the more desirable the project. True/False
- A positive net present value of a project indicates that the projects return is lower than the discount rate. True/False
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Economic Development Finance
Authors: Karl F Seidman
1st Edition
0761927093, 9780761927099
