Which one of the following is an indicator that an investment is acceptable?

a.Total revenues are greater than total costs

b.Profitability index is greater than zero

c.Internal rate of return that exceeds the required return

d.Payback period that exceeds the required period

e.All of the above

Given the goal of the firm, which of the following is the only investment decision criterion that will give consistently correct answers when ranking comparable mutually exclusive projects?

a.Internal Rate of Return

b.Net Present Value

c.Profitability Index

d.Profitability Index

e. None of the above

Which of the following factors would not have an impact on the cash flow estimates?

a.The new equipment would require $5,000 in shipping costs

b.$25,000 was spent last year to improve the space that will house the equipment.

c.The space for the equipment could be rented out for $1,000 per month.

d.The new equipment would reduce the volume of an existing service line.

e.The new equipment would increase accounts receivable by $20,000.