Quiz Ch 02 – NPV Rule and Rate of Return Rule
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
Which statement about the NPV rule and the rate of return rule is incorrect?
Which statement about the NPV rule and the rate of return rule is incorrect?
What is the opportunity cost of capital for a risky project?
What is the present value formula for a cash flow expected one period from now?
True or false: An annuity is clarified as making fixed periodic payments over a defined duration.
True or false: Comparing the value of dollars, a safe dollar is consistently lower than a risky dollar, given the typically lower return on safe investments and the higher return on risky investments.
True or false: The equal-payment home mortgage exemplifies an annuity.
True or false: The terms rate of return, discount rate, hurdle rate, and opportunity cost of capital are interchangeable.
True or false: The value of a five-year annuity is the sum of two perpetuities, each commencing payments in different years.
True or false: The investment rule suggests prioritizing investments with returns that surpass their opportunity costs.
True or false: In equal-payment mortgage amortization, the interest portion increases while the loan reduction portion decreases over time.