Student name: Aniekan Ntia MULTIPLE CHOICE-Choose the one alternative that best completes the statement or answers the question. 1) Which of the following statements is true? 1. In the payback method, depreciation is added back to net operating income when computing the annual net cash flow. 2. When a company is cash poor, a project with a short payback period bat a low rate of return may be preferred to a project with a long payback period and a high rate of refurt 3. A shorter payback period does not necessarily mean that one investment is more desirable than another. A) Only statement 1 is true. B) Only statement 3 is true. C) All of the statements are true. D) None of the statements are true. Which of the following statements is true? 1. In calculating the payback period where new equipment is replacing old equipme salvage value to be received on disposal of the old equipment should be deducte the cost of the new equipment. 2. The payback method is most appropriate for projects whose cash flows do not into the future. A) Only statement 1 is true. B) Only statement 2 is true. C) Both statements are true. D) Neither statement is true. Which of the following statements is true? 1. The required rate of return is the maximum rate of return that an investm yield to the acceptable. 2. The cost of capital is the average rate of retum that the company earns 3. The net present value method assumes that cash flows from a project a reinvested at a rate of return equal to the internal rate of return. A) Only statement 1 is true