Question
True or False 1. It is correct to say that the payback period (PP) method ignores the time value of money. 2. No project can
True or False
1. It is correct to say that the payback period (PP) method ignores the time value of money.
2. No project can have more than one internal rate of return (IRR).
3. A projects equivalent annual annuity (EAA) is expressed in dollars.
4. When the IRR serves as the discount rate, the net present value (NPV) = $0.
5. A project should be accepted if its profitability index (PI) > 0.
6. The IRR assumes that all interim cash flows are reinvested at the IRR.
7. To graph the IRR, NPVs are arrayed along the vertical axis.
8. If the payback period is 3 years and the cutoff period is 4 years, the project should be rejected.
9. When calculating a projects NPV, it is fair to assume that the cost is already a present value.
10. It is fair to rank projects from best to worst solely on their respective NPVs.
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