QUESTION 7

1. According to one study done some time ago, most small firms use the _____ method to evaluate capital projects.

   	a.	payback
   	b.	IRR
   	c.	NPV
   	d.	PI

2 points

QUESTION 8

1. Riskier projects should be harder to accept than others with similar cash flows. This is accomplished by:

   	a.	Using lower discount rates which will lower the NPV of the project.
   	b.	Using higher discount rates which will lower the NPV of the project.
   	c.	Using lower discount rates which will increase the NPV of the project.
   	d.	Using higher discount rates which will increase the NPV of the project.

2 points

QUESTION 9

1. The money needed to get a project started is generally referred to as the initial outlay. It includes all cash outflows:

   	a.	throughout the life of the project.
   	b.	before or at the start of the project, generally referred to as at time zero.
   	c.	before the start of the project and in its first year.
   	d.	already spent.