1. Which of the following variables is required in the net present value formula?

   • discount rate
   • projections of expected cash flow from the investment over time
   • initial investment amount
   • All of the above.

2. Dividends, interest, rents, or other income can be ___________.

   • discount rates
   • managerial accounting
   • cash inflows
   • traditional financial accounting

3. If the net present value is greater than zero, it is an investment that you should make.

   • True
   • False

4. __________ is the discount rate at which the net present value equals zero.

   • NPV
   • CAPM
   • ARR
   • IRR

5. We can effectively use the NPV method to rank projects

   • True
   • False

6. If the internal rate of return is less than the rate of return you require on the investment, you ________ the investment.

   • reject
   • accept
   • consider
   • pay

7. The _____________ is defined as the net present value of an opportunity divided by the amount of the initial investment.

   • discount rate
   • net present value
   • profitability index
   • annual rate of return