O One can use the IRR rule for investment decision making without knowing the discount rate O The project with the highest IRR does not necessarily create the most value add O The IRR rule ignores cash flows that are very far in the future O The project with the highest IRR is by definition the project with the most value add O The IRR is the discount rate that makes the project's NPV equal to zero Question 3 Select all that are true with respect to the payback period for making capital investment decisions. O The payback period is the amount of time it takes for a project to generate breakeven income O The payback period is the amount of time it takes for a project's cumulative cash flows to become zere O The payback period ignores all cash flows beyond a specified required payback period O The payback period ignores a project's initial investment O The payback period ignores the time value of money
O One can use the IRR rule for investment decision making without knowing the discount rate O The project with the highest IRR does not necessarily create the most value add O The IRR rule ignores cash flows that are very far in the future O The project with the highest IRR is by definition the project with the most value add O The IRR is the discount rate that makes the project's NPV equal to zero Question 3 Select all that are true with respect to the payback period for making capital investment decisions. O The payback period is the amount of time it takes for a project to generate breakeven income O The payback period is the amount of time it takes for a project's cumulative cash flows to become zere O The payback period ignores all cash flows beyond a specified required payback period O The payback period ignores a project's initial investment O The payback period ignores the time value of money
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Question 2
Select all that are true with respect to the IRR rule for making capital investment decisions.
The IRR rule does not distinguish between borrowing and lending
O One can use the IRR rule for investment decision making without knowing the discount rate
The project with the highest IRR does not necessarily create the most value add
The IRR rule ignores cash flows that are very far in the future
The project with the highest IRR is by definition the project with the most value add
O The IRR is the discount rate that makes the project's NPV equal to zero
Question 3
Select all that are true with respect to the payback period for making capital investment decisions.
O The payback period is the amount of time it takes for a project to generate breakeven income
O The payback period is the amount of time it takes for a project's cumulative cash flows to become zero
O The payback period ignores all cash flows beyond a specified required payback period
O The payback period ignores a project's initial investment
The payback period ignores the time value of money
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