True or False:

_____1.The goal of management is to maximize stockholders wealth.

______2. Everything else unchanged, an increase in interest rates will lower the present value of future cash flows.

______3. The present value of a $100 one year from now is greater than the present value of $100 two years from now.

_____4.Capital Budgeting analysis focuses on income as opposed to cash flows.

_____5.In project analysis, allocations of overhead should be limited to only those that represent additional expense due to the project.

_____6. Upon the sale of equipment at the end of its useful life, tax liability will beincurred whenever the book value is less than the sales price.

_____7. When funds are committed to working capital at the start of a project,these funds are assumed to be recovered at the end of projects life.

_____8. As the opportunity cost of capital increases, net present value of projectdecreases, everything else held constant.

_____9. Management that invests in projects with positive net present value, willincrease the value of the firm.

_____10.Cost of debt capital is lower than the cost of equity capital.

_____11.Cost of preferred stock after tax = r(ps))*(1-t)

_____12.The weighted average cost of capital is used in evaluating capital budgeting proposal by the firm.