True or False?

5. ___ A 15% discount rate was used to compute the net present value of a project. If the NPV

is positive, the internal rate of return is lower than 15%.

6. ___ The time value of money is part of the internal rate of return model for capital budeting.

7. ___ When the NPV of a project is negative, the IRR would be lower than the discount rate

used to compute the NPV.

8. ___ The net cash effect of $30,000 depreciation expense per year, assuming a 40% income tax

rate, is an $18,000 cash inflow per year.

9. ___ When income taxes are considered, the effects of depreciation expense have a negative

present value.

10.___ The after tax effect of depreciation expense on net cash inflows for a year is the depreciation