Quiz Ch 08 – T/F Payback Period and NPV Equilibrium
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: The payback period of a project represents the duration required to reach an NPV equilibrium of zero.
True or false: The payback period of a project represents the duration required to reach an NPV equilibrium of zero.
True or false: In the process of project selection using a profitability index, a high value is favored over a low value.
True or false: Discounted cash-flow analysis is, indeed, the primary tool for project evaluation for most managers.
True or false: The shareholder wealth is reduced by the project’s cost in an NPV of zero result projects.
True or false: A decrease in the opportunity cost of capital leads to an increase in the net present value of a project.
True or false: A risky dollar is typically valued more highly than a safe dollar.
True or false: In the case of mutually exclusive projects, the correct choice is the project with the higher IRR.
True or false: The choice between mutually exclusive projects of comparable lifespans becomes more straightforward thanks to the NPV rule. Whenever there’s a project with a positive NPV, the one with the highest NPV becomes the obvious pick.
True or false: Soft rationing should ideally NOT impose any costs on the firm.
True or false: The payback method is rarely employed in contemporary corporate financial analysis due to its shortcomings.