Chapter 05 - Net Present Value and Other Investment Rules 5-1 Chapter 05 Net Present Value and Other Investment Rules Answer Key Multiple Choice Questions1. The difference between the present value of an investment and its cost is the: A.net present value. B. internal rate of return. C. payback period. D. profitability index. E. discounted payback period. Difficulty level: Easy Topic: NET PRESENT VALUE Type: DEFINITIONS 2. Which one of the following statements concerning net present value (NPV) is correct? Difficulty level: Easy Topic: NET PRESENT VALUE RULE Type: DEFINITIONS

Chapter 05 - Net Present Value and Other Investment Rules 5-2 3. The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the: Difficulty level: Easy Topic: PAYBACK Type: DEFINITIONS 4. Which one of the following statements is correct concerning the payback period? Difficulty level: Easy Topic: PAYBACK RULE Type: DEFINITIONS 5. The length of time required for a project's discounted cash flows to equal the initial cost of the project is called the: A. net present value. B. internal rate of return. C. payback period. D. discounted profitability index. E.discounted payback period. Difficulty level: Easy Topic: DISCOUNTED PAYBACK Type: DEFINITIONS

Chapter 05 - Net Present Value and Other Investment Rules 5-3

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- Fall '08
- Sengupta,J
- Net Present Value