1. In the payback method, depreciation is added back to net operating income when computing the annual net cash flow. A) True B) False 2. The internal rate of return is computed by finding the discount rate that equates the present value of a project's cash outflows with the present value of its cash inflows. A) True B) False 3. The internal rate of return method assumes that the cash flows generated by the project are immediately reinvested elsewhere at a rate of return that equals the company's cost of capital A) True B) False 4. An increase in the expected salvage value at the end of a capital budgeting project will increase the internal rate of return for that project. A) True