|The project’s cash inflows equal its cash outflows in current dollar terms.
||A project has a net present value of zero. Which one of the following best describes this project?
|Increasing the project’s initial cost at time zero.
||Which one of the following will decrease the net present value of a project?
|Net Present Value (NPV)
||Which one of the following methods determines the amount of the change a proposed project will have on the value of a firm?
|the project earns a return exactly equal to the discount rate
||If a project has a net present value equal to zero, then:
|The cash flow in year two is valued just as highly as the cash flow in year one.
||A project has a required payback period of three years. Which one of the following statements is correct concerning the payback analysis of this project?
|The project must have a profitability index that is equal to or greater than 1.0.
||A project has a discounted payback period that is equal to the required payback period. Given this, which of the following statements must be true?
|The discounted payback period decreases as the discount rate decreases.
||Which one of these statements related to discounted payback is correct?Payback is a better method of analysis than discounted payback.Discounted payback is used more frequently in business than payback.Discounted payback does not require a cutoff point.Discounted payback is biased towards long-term projects.The discounted payback period decreases as the discount rate decreases.
|Some positive net present value projects to be rejected.
||Applying the discounted payback decision rule to all projects may cause:
|Condensing the firm’s cash inflows into fewer years without lowering the total amount of those inflows.
||Tedder Mining has analyzed a proposed expansion project and determined that the internal rate of return is lower than the firm desires. Which one of the following changes to the project would be most expected to increase the project’s internal rate of return?
||The profitability index is most closely related to which one of the following?