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According to the stand-alone principle, the evaluation of a project is based on the project’s Blank______ cash flows.
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- Which of the following is/are true for the average accounting return method of project analysis? I. does not need a cutoff rate II. ignores time value of money II. is based on project's cash flows IV. easily obtainable information for computation Multiple Choice I only I, II, II, and IV13)Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. a. If Project A has a higher IRR than Project B, then Project A must also have a higher NPV. b. If a project has normal cash flows and its IRR exceeds its cost of capital, then the project's NPV must be positive. c. The IRR calculation implicitly assumes that all cash flows are reinvested at the cost of capital. d. If Project A has a higher IRR than Project B, then Project A must have the lower NPV. e. The IRR calculation implicitly assumes that cash flows are withdrawn from the business rather than being reinvested in the business.
- Which of the following statements is most correct? If a project’s internal rate of return (IRR) exceeds the cost of capital, then the project’s profitability index must be positive. If Project A has a higher IRR than Project B, then Project A must also have a higher NPV. The IRR calculation implicitly assumes that all cash flows are reinvested at a rate of return equal to the IRR. Group of answer choices Only statements I and II are incorrect. None of the statements above is incorrect. Only statement II is correct. Only statement I is correct. Only statement III is incorrect.The internal rate of return method assumes that a project's cash flows are reinvested at the: Multiple Choice internal rate of return. simple rate of return. required rate of return. payback rate of return.When you are evaluating independent projects and the projects' cash flows are conventional, the IRR and NPV methods will always agree. O No answer text provided. O No answer text provided. O False True
- The best model to analyze the project financially is cash flow. Select one: O True O FalseWhich of the following statements is correct regarding the payback method? Takes account of differences in size among projects. If a project’s payback is positive, then the project should be accepted because it must have a zero NPV. Ignores cash flows beyond the payback period. Has an objective, market-determined benchmark for making decisions. Directly account for the time value of money.Which of the following should you focus when assessing the NPV of a project for a MNC? I. variability of the project's cash flow. II. correlation of the project's cash flow relative to the prevailing cash flows of the MNC. III. interest rate IV. capital structure A. II, III B. I, III C. III, IV D. I, II
- Explain why the NPV is a more accurate measure than IRR when evaluating the financial profitability of a project.Which of the following is an advantage of using the payback period method for project selection? The payback period method considers the time value of money The payback period method considers accounting income The payback period method shows when funds will be available for reinvestment The payback period method ignores the time value of moneyWhich of the following statement is correct Select one: a. A project is accepted when profitability index will be greater than one b. All statements are correct c. A project is accepted when net present value is greater than zero d. A project is accepted when payback period is less than the other project