9. The present value of an investment's future cash flows divided by the initial cost of the investment is called the: a. net present value.b. internal rate of return.c. average accounting return.D. profitability index.e. profile period.SECTION: 9.6TOPIC: PROFITABILITY INDEXTYPE: DEFINITIONS9-3

Chapter 009 Net Present Value and Other Investment Criteria10. Capital budgeting decisions generally: SECTION: CHAPTER 9 INTRODUCTIONTOPIC: CAPITAL BUDGETING DECISIONSTYPE: CONCEPTS11. Which one of the following is a capital budgeting decision? SECTION: CHAPTER 9 INTRODUCTIONTOPIC: CAPITAL BUDGETING DECISIONSTYPE: CONCEPTS12. Which one of the following will increase the net present value of a project? SECTION: 9.1TOPIC: NET PRESENT VALUETYPE: CONCEPTS9-4

Chapter 009 Net Present Value and Other Investment Criteria13. A project creates value for a firm's owners: A. when the net present value of the project is positive.b. any time the cash inflows exceed the cash outflows.c. whenever the internal rate of return is less than the required return.d. whenever the profitability index is less than one.e. whenever the payback period exceeds the life of the project.SECTION: 9.1TOPIC: NET PRESENT VALUETYPE: CONCEPTS14. If a project has a net present value equal to zero, then: SECTION: 9.1TOPIC: NET PRESENT VALUETYPE: CONCEPTS

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