Answer d diff2 terms netpresentvalue npvmethod

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Unformatted text preview: or positive net present value are acceptable because: A) the return from these projects equals or exceeds the cost of capital B) a positive net C) present value on a particular project guarantees company profitability the company D) will be able to pay the necessary payments on any loans secured to finance the project Both A and B are correct. Answer: A Diff: 2 Terms: net present value (NPV) method Objective: 3 AACSB: Reflective thinking 62) Which of the following is NOT an appropriate term for the required rate of return? A) discount rate B) hurdle rate C) cost of capital D) All of these answers are correct. Answer: D Diff: 2 Terms: RRR, discount rate, hurdle rate, opportunity cost of capital Objective: 3 AACSB: Reflective thinking 63) Which of the following results of the net present value method in capital budgeting is the LEAST acceptable? A) $(10,000) B) $(7,000) C) $(18,000) D) $0 Answer: C Diff: 2 Terms: net present value (NPV) method Objective: 3 AACSB: Reflective thinking 64) The definition of an annuity is: A) similar to the B) definition of a life insurance policy a series of equal cash flows at intervals C) an investment product whose funds are invested in the stock market D) Both A and B are correct. Answer: B Diff: 2 Terms: net present value (NPV) method Objective: 3 AACSB: Reflective thinking 65) The net present value method focuses on: A) cash inflows B) accrualC) accounting net income cash outflows D) Both A and C are correct. Answer: D Diff: 2 Terms: net present value (NPV) method Objective: 3 AACSB: Reflective thinking 66) If the net present value for a project is zero or positive, this means that the: A) project should be accepted B) project should not be accepted C) expected rate of return is below the required rate of return D) Both A and C are correct. Answer: A Diff: 2 Terms: net present value (NPV) method Objective: 3 AACSB: Reflective thinking 67) Upper Darby Park Departme nt is considering a new capital investment. The following information is available on the investment. The cost of the machine will be $150,000. The...
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