Study Guide questions:

You must choose only one method in evaluating your projects and investments

• True
• False

The only method discussed in this lesson that considers the time value of money.

• Net present value
• Payback period
• accounting rate of return
• all of the above

The ____________ is the sum of all the individuals outflows and/or inflows related to any investment, with each of the individual cash flows discounted to its present value.

• payback period
• net present value
• accounting rate of return
• growing annuity

If you invest $100,000 which returns $20,000 a year, how long would be the payback period be?

• one year
• two years
• five years
• ten years

The present value of the projected future inflows must be greater than the present value of the outflows.

• True
• False

Which of the following is an approach used for evaluating investment opportunities?

• the payback method
• net present value
• accounting rate of return
• All of the above.

Tools that can be used to determine if an investment is worth putting capital into

• Capital budgeting
• Ratio analysis
• Trends
• Cash flow analysis