Chapter 10 Homework
1. Which of the following statements is CORRECT?
a. The internal rate of return method (IRR) is generally regarded by academics as being the best
single method for evaluating capital budgeting projects.
b. The payback method is generally regarded by academics as being the best single method for
evaluating capital budgeting projects.
c. The discounted payback method is generally regarded by academics as being the best single
method for evaluating capital budgeting projects.
d. The net present value method (NPV) is generally regarded by academics as being the
best single method for evaluating capital budgeting projects.
e. The modified internal rate of return method (MIRR) is generally regarded by academics as
being the best single method for evaluating capital budgeting projects.
2. Projects A and B have identical expected lives and identical initial cash outflows (costs).
However, most of one project’s cash flows come in the early years, while most of the other
project’s cash flows occur in the later years. The two NPV profiles are given below:
Which of the following statements is CORRECT?
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 Spring '08
 NALLA
 Corporate Finance, Net Present Value, capital budgeting projects., best single method

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