Question
Which of the following two statements is false? a.To compute the NPV for a project, you need to estimate the incremental cash flows and choose
Which of the following two statements is false? a.To compute the NPV for a project, you need to estimate the incremental cash flows and choose a discount rate. b. Estimates of the cash flows and cost of capital are often subject to significant uncertainty. c. When we are certain regarding the input to a capital budgeting decision, it is often useful to determine the break-even level of that input. d. Sensitivity analysis allows us to explore the effects of errors in our estimated inputs in our NPV analysis for the project.
e. It is possible that an IRR does not exist for an investment opportunity. | ||
f. | The internal rate of return (IRR) investment rule is based upon the notion that if the return on other alternatives is greater than the return on the investment opportunity you should undertake the investment opportunity. | |
g. | If the payback period is less than a pre-specified length of time you accept the project. | |
h. | It is possible that there is no discount rate that will set the NPV equal to zero. |
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