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There are eight questions in this part, each worth five points. First, make your choice, i.e., true or false, with respect to the given statement.
There are eight questions in this part, each worth five points. First, make your choice, i.e., "true or false", with respect to the given statement. Then, explain your choice in one or two sentences. A correct choice earns two points, and a correct explanation earns three points. Make your explanation concise. A lengthy explanation does bad than good. 1. Depreciation does not affect capital budgeting because it is not a cash expense. 2. Annuity due is more valuable than annuity. 3. A positive NPV project can have a profitability index smaller than one. 4. Payback period accounts for the risk of cash flows. 5. Between two mutually exclusive projects, we should choose the one whose profitability is higher. 6. We do not count the equipment that has been held in the capital budgeting process. 7. All else equal, the decrease of account payable leads to a decrease of the free cash flow. 8. The capital expenditure equals the difference between the ending and beginning balances of fixed assets
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