Q1. If a proposal's profitability index is greater than one then the net present value is positive.

True or False

Q2. There is no adjustment in the payback method for the time value of money.

True or False

Q3.

Capital-budgeting decisions primarily involve:

Multiple Choice

• emergency situations.

• long-term decisions.

• short-term planning situations.

• cash inflows and outflows in the current year.

• planning for the acquisition of capital.

q4.

Which of the following choices correctly states the rules for project acceptance under the net-present-value method and the internal-rate-of-return method?

	Net Present Value	Internal Rate of Return
A.	Positive total	Greater than hurdle rate
B.	Positive total	Less than hurdle rate
C.	Negative total	Greater than hurdle rate
D.	Negative total	Less than hurdle rate
E.	Greater than hurdle rate	Positive number

Multiple Choice

• Choice A

• Choice B

• Choice C

• Choice D

• Choice E