Which of the following is an aspect of independent projects?

		The cash flows are related.
		The cash flows are unrelated.
		Selecting one would automatically eliminate accepting the other.
		None of the above

2.5 points

Question 2

The net present value

		uses the discounted cash flow valuation technique.
		will provide a direct measure of how much a firms value will change because of the capital project.
		is consistent with shareholder wealth maximization goal.
		All of the above

2.5 points

Question 3

Which of the following is an advantage of the payback method?

		The technique is simple for managers to compute and interpret.
		It is a good measure of liquidity risk.
		Both a and b
		None of the above

2.5 points

Question 4

Which of the following is a disadvantage of the payback method?

		It ignores the time value of money.
		It is inconsistent with the goal of maximizing shareholder wealth.
		It ignores cash flows beyond the payback period.
		All of the above.

2.5 points

Question 5

The internal rate of return is

		the discount rate that makes the NPV greater than zero.
		the discount rate that makes the NPV equal to zero.
		the discount rate that makes the NPV less than zero.
		Both a and c are correct.