Chapter 14 from review questions Flashcards
Which capital budgeting methods consider cash flow, but not the time value of money
the payback method
What type of decisions is the profitability index used for?
It is used for preference decisions
Which measures the length of time that it takes for a project to recover its initial costs from the net cash inflows that it generates?
The payback method
T/F A Net present value of zero indicates that the project should be rejected
False
What describes how companies plan significant investments in projects that have long-term implications
Capital budgeting
T/F Regarding Internal Rate of Return: It represents the rate of return earned by an investment project
True
The equation for Simple Rate of Return:
Annual Incremental Net operating income/internal investment
The internal Rate of return method considers
TVM and Cashflow
