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 . they return the initial cash outlay within three years or less .
4 . Accepting a positive net present value ( NPV ) project : indicates the project will pay back within the required period of time . is expected to increase the stockholders ’ value by the amount of the NPV . ignores the inherent risks within the project . guarantees all cash flow assumptions will be realized . means the present value of the expected cash flows is equal to the project ’ s cost .
5 . The net present value method of capital budgeting analysis does all of the following except : use all of a project ' s cash flows . discount all future cash flows . consider all relevant cash flow information . incorporate risk into the analysis . provide a specific anticipated rate of return .
6 . What is the net present value of a project with an initial cost of $ 36,900 and cash inflows of $ 13,400 , $ 21,600 , and $ 10,000 for Years 1 to 3 , respectively ? The discount rate is 13 percent .