FIN 571 Course Great Wisdom / tutorialrank.com FIN 571 Course Great Wisdom / tutorialrank.com | Page 47

internal rate of return.
profitability index.
discounted payback period.
net present value.

2.Which statement concerning the net present value (NPV) of an
investment or a financing project is correct?
An investment project that has positive cash flows for every time
period after the initial investment should be accepted.
Any type of project should be accepted if the NPV is positive and
rejected if it is negative.
A financing project should be accepted if, and only if, the NPV is
exactly equal to zero.
Any type of project with greater total cash inflows than total cash
outflows, should always be accepted.
An investment project should be accepted only if the NPV is equal to
the initial cash flow.

3.The primary reason that company projects with positive net present
values are considered acceptable is that:
they create value for the owners of the firm.
the investment's cost exceeds the present value of the cash inflows.
the project's rate of return exceeds the rate of inflation.
the required cash inflows exceed the actual cash inflows.