Select best answer:

1. Net Present Value: 

a. cannot be used when deciding between two mutually exclusive projects 

b.is more useful than the internal rate of return when comparing different sized projects 

c. is rarely used by small firms 

d. is not as widely used in practice as payback or discounted payback

2. The profitability index: 

a. rule often results in decisions that conflict with the decisions based on the NPV rule 

b. is useful as a decision tool when investment funds are limited and all available funds are allocated 

c. Method is most commonly used when deciding between mutually exclusive projects of varying size 

d. rule adjusts for projects size when discussing which one of two projects to accept

3. Liquidity is: 

a. a measure of the use of debt in a firms capital structure 

b. equal to current assets minus current liabilities 

c. equal to the market value of a firm's total assets minus its total liabilities 

d. valuable to a firm even though liquid assets tend to be less profitable to own

4.In the present value break-even, the EAC is used to: 

a. determine the salvage value of the initial fixed asset investment, 

b. allocate depreciation over the life of the project, 

c. allocate the initial investment at its opportunity cost over the life of the project, 

d. determine the contribution margin to fixed costs