If project "B" requires and outlay (Investment) of $100, then the sum of all cash flows must be: 70.00 60.00 50.00 40.00 30.00 NPV 20.00 10.00 0.00 8.43 17 20 - 10.00 -20.00 RATE % QUESTIONS When analyzing ALPHA's Internal Rate of Return and the Average Accounting Return, which statement is correct? ALPHA BETA GAMMA Payback Period 200 338 2.10 Average Accounting Return 27.60% 13.35% 28.77% Internal Rate of Return 31.42% 13.86% 32.11% Not Present Value $4,043 ($1,615) $3,969 Profitability Index 1.2021 0.816 1.2205 The Internal Rate of Return ignores time value of the cash flows. The Average Accounting Return 'understates' actual cash flow for Alpha The Average Accounting Return 'overstates' actual cash flow for Alpha, The Average Accounting Return appropriately addresses the time value of ALPHA's cash flows. QUESTION 12 GAMMA has a NPV of $3,969 and Profitability Index of 1.2205. What is the formula to determine GAMMA's outlay (investment)? ALPHA BETA GAMMA Payback Period 2.00 338 2.10 Average Accounting Return 27.60% 13.35% 28.77% Internal Rate of Return 31.42% 13.86% 32.11% Net Present Value $4,043 ($1,615) $3,969 Profitability Index 1.2021 0846 1.2205 $3969 / 0.2205 $3969 x 1.2205 None of these formulas are correct. 53969 / 1.2205