Accounting_203_Chapter_12_Test

Accounting_203_Chapter_12_Test - ACCOUNTING 203 Chapter 12...

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ACCOUNTING 203 Chapter 12 Practice Test True and False Questions 1. The simple rate of return is the same as the internal rate of return. 2. If two projects require the same amount of investment, then the preference ranking computed using either the profitability index or the net present value would be the same. 3. Preference decisions attempt to determine which of many alternative investment projects would be the best for the company to accept. 4. A very useful guide for making investment decisions is: The shorter payback period, the more profitable the project. 5. The cost of capital involves blending of costs of all sources of capital funds, both debt and equity. Multiple Choice Questions 6. Spring Company has invested $20,000 in a project. Spring’s discount rate is 12% and the profitability index on the project is 1.00. Which of the following statements would be true? I. The present value of the project’s net cash flows is $20,000. II.
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This note was uploaded on 05/17/2011 for the course ACCT 203 taught by Professor Mac during the Spring '11 term at Chicago State.

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Accounting_203_Chapter_12_Test - ACCOUNTING 203 Chapter 12...

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