Question $2(1$ point$)$

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The most critical aspect in determining the acceptability of a capital budgeting project is the impact the project will have on the company's net income over the projects entire useful life.

Question $2$ options:

$1)$ True$2)$ False

Question $3(1$ point$)$

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The main disadvantage of the NPV method is the need for detailed, long$-$term forecasts of free cash flows generated by prospective projects.

Question $3$ options:

$1)$ True$2)$ False

Question $4(1$ point$)$

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If a project's profitability index is less than one, then the project should be rejected.

Question $4$ options:

$1)$ True$2)$ False

Question $5(1$ point$)$

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Because the NPV and PI methods both yield the same accept$/$reject decision, a company attempting to rank capital budgeting projects for funding consideration can use either method and get the same results.

Question $5$ options:

$1)$ True$2)$ False

Question $6(1$ point$)$

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Capital rationing generally leads to higher stock prices as management is doing the best job it can in selecting only the best capital budgeting projects.

Question $6$ options:

$1)$ True$2)$ False

Question $7(1$ point$)$

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The profitability index is the ratio of the present value of the future free cash flows to the initial investment.

Question $7$ options:

$1)$ True$2)$ False

Question $8(1$ point$)$

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Two projects that have the same cost and the same expected cash flows will have the same net present value.

Question $8$ options:

$1)$ True$2)$ False

Question $9(1$ point$)$

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If a project has multiple internal rates of return, the lowest rate should be used for decision$-$making purposes.

Question $9$ options:

$1)$ True$2)$ False

Question $10(1$ point$)$

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The required rate of return reflects the costs of funds needed to finance a project.

Question $10$ options:

$1)$ True$2)$ False