Chapter 10 Quiz1.The IRR is the discount rate that equates the NPV of an investment opportunity with $0.
2. Capital budgeting is the process of evaluating and selecting short – term investments consistent withthe firms goal of owner wealth maximization.
3. If net present value of a project is greater than zero, the firm will earn a return greater than its cost of capital. The acceptance of such a project would enhance the wealth of the firms owners.
4. The PAYBACK PERIODmeasures the amount of time it takes the firm to recover its initial investment. 5.In general, exchange rate risk is easier to protect against than political risk.
6.Net present value profilers are most useful when selecting among mutually exclusive projects?
7.Which capital budgeting method is most useful for evaluating the following project? The