LSE QUESTIONS (Each one is 2 points) Please discuss why it is true or false in 1-2 sentences. 1) The internal rate of return (IRR) is defined as the discount rate that equates the net present value with the initial investment associated with a project. 2) The IRR is the discount rate that equates the NPV of an investment opportunity with So. >> The IRR is the compound annual rate of return that the fimm will earn if it invests in a project and receives the estimated cash inflows 4) An internal rate of return greater than the cost of capital guarantees that the firm carns at least its required retum. Investing in such a project would enhance the market value of the firm and therefore the wealth of its owners. 5) A sophisticated capital budgeting technique that can be computed by solving for the discount rate that equates the present value of a projects inflows with the present value of its outflows is called net present value. A sophisticated capital budgeting technique that can be computed by solving for the discount rate that equates the present value of a projects inflows with the present value of its outflows is called internal rate of return. 2) If its IRR is greater than $0.00, a project should be accepted. ) If its IRR is greater than 0 percent, a project should be accepted . If its IRR is greater than the cost of capital, a project should be accepted. 10) If a project's payback period is less than the maximum acceptable payback period, we would reject it. 11) If a project's payback period is less than the maximum acceptable payback period, we would accept it. 12) If a project's payback period is greater than the maximum acceptable payback period, we would reject it. 13) If a project's payback period is greater than the maximum acceptable payback period, we would accept it. 16. The payback period of a project that costs $1,000 initially and promises after-tax cash inflows of $300 for the next three years is 3.33 years. 15) If net present value of a project is greater than zero, the fimm will earn a return greater than its cost of capital. The acceptance of such a project would enhance the wealth of the firm's owners