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1)It should not usually be clear whether we are describing independent or mutually exclusive projects in the following chapters because when we only describe one project then it can be assumed to be independent
1)It should not usually be clear whether we are describing independent or mutually exclusive projects in the following chapters because when we only describe one project then it can be assumed to be independent. TRUE OR FALSE
2. Net present value (NPV) is a sophisticated capital budgeting technique; found by adding a project’s initial investment from the present value of its cash inflows discounted at a rate equal to the firm’s cost of capital. TRUE OR FALSE
3. The Internal Rate of Return (IRR) is the discount rate that equates the NPV of an investment opportunity with $0. TRUE OR FALSE
Expert Solution
Answer : 1) FALSE
Reason :
It should not usually be clear whether we are describing independent or mutually exclusive projects in the following chapters because when we only describe one project then it can be assumed to be mutually exclusive.
Answer : 2) False
Reason :
Net present value (NPV) is a sophisticated capital budgeting technique; found by subtracting a project's initial investment from the present value of its cash inflows discounted at a rate equal to the firm's cost of capital.
Answer :3) TRUE
Reason :
The Internal Rate of Return (IRR) is the discount rate that equates the NPV of an investment opportunity with $0 ui.e it is the rate at which present value of cash inflow is equal o Present Value of Cash Outflow.
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