capital budget committee, officials, board of directors.True False8.A positive net present value is means that the project’s rate of return exceeds the required rate of return.True False9.The discount rate and the hurdle rate are the same.True False10. If a project has intangible benefits whose value is hard to estimate, it is best to ignore the benefits, since any estimate of their value would most likely be wrong.True False11. A company is considering two projects. Project A requires an initial investment of $50,000 and gives an annual cash flow of $10,000. Project B requires an initial I investment of $80,000 and annual cash flow of $8,000. Using the cash payback technique, which should be chosen? (Show your work)12. The following information is available for a potential capital investment:Initial investment $60,000Net annual cash flow 15,400Net present value3,143Useful life 5 yearsCalculate the potential investment’s internal rate of return. Round to the nearest hundredth.(Show your work)3
13. Suppose Reno Company’s net income of $13,000 includes a charge for depreciation expense of $26,000, then its estimated net annual cash flows would be $39,000.True False14. The two popular techniques for evaluating capital investments are the payback and net present value methods.True False15. Cash outflows are monies coming in and cash inflows are monies going out.True False16. Subtracting a company’s annual cash outflows from annual cash inflow equal net annual cash flow.True False17. A proposal is accepted when net present value zero or negative.True False18. When making a selection among acceptable proposals, the higher the positive net present value, the more attractive the investment.True False19. If the net present value of a proposed project is negative, we accept the proposal.True False20. When the annual cash flows are unequal, we cannot use annuity tables to calculate their net present value. Instead we use tables showing the present value of a single future amount for each annual cash flow.True False4