Question 14 The annual rate of return is computed by dividing net annual cash flow by the average investment. A True B) False Question 15 The profitability index takes into account both the size of the original investment and the discounted cash flows. A True B) False 1.75 Points 1.75 Points Question 16 1.75 Points The internal rate of return is the interest rate that will cause the present value of the proposed capital expenditure to equal the present value of the expected net annual cash flows A True B) False Question 17 The internal rate of return method does not recognize the time value of money. A True B) False 1.75 Points