Pick CORRECT answer, explain or show work 23. The capital investment decision making model that assumes that each cash inflow is reinvested at the required rate of return is a. net present value. b. internal rate of return. c. payback period. d. accounting rate of return. e. none of these. 24. The best model for choosing the best of several competing projects is a. net present value. b. internal rate of return. c. payback period. d. accounting rate of return. e. none of these. 25. One disadvantage of the payback period is that a. it is sometimes used as a crude measure of risk. b. managers may choose investments with quick payback periods to maximize short term criteria on which their own bonuses, etc. may be based. c. it cannot be used for investments with unequal cash inflows. d. it cannot be used if the entire cost of the investment does not occur immediately. e. all of these. 26. The reason that a discount factor in year 3 is less than a discount factor in year 2 is that a. cash flows are uneven. b. compounding does not occur. c. cash flows are even. d. present value is positive. e. a dollar received in three years is worth less than a dollar received in two years. 27. A company is considering two projects. Project A Project B Initial investment $150,000 $150,000 Cash inflow Year 1 $50,000 $40,000 Cash inflow Year 2 $50,000 $40,000 Cash inflow Year 3 $50,000 $40,000 Cash inflow Year 4 $50,000 $60,000 Cash inflow Year 5 $50,000 $80,000 What is the payback period for Project A? a. 2 year b. 2.5 years c. 3 years d. 3.5 years e. 5 years 28. What is the payback period for Project B? a. 2 years b. 2.5 years c. 3 years d. 3.5 years e. 5 years