final multiple choice - Homework#7 I Multiple Choice...

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Homework #7 I. Multiple Choice Questions 1. A situation in which accepting one investment prevents the acceptance of another investment is called the: a. net present value profile. b. operational ambiguity decision. c . mutually exclusive investment decision. d. economies of scale decision. e. multiple choices of operations decision. 2. Which one of the following is a capital budgeting decision? 3. Net present value: 4. Net present value: a . should be used when deciding between two mutually exclusive projects. b. is less useful than the internal rate of return when comparing different sized projects. c. is easy to explain to non-financial, low-level managers. d. is less useful than the profitability index when comparing mutually exclusive projects. e. is very similar in its methodology to the average accounting return.
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5. The advantages of the payback method of project analysis include the: I. application of a discount rate to each separate cash flow. II. bias towards liquidity. III. ease of use. IV. arbitrary cutoff point. 6. The internal rate of return (IRR): I. rule states that a project is acceptable when the IRR exceeds the required rate of return.
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