Question: Question One State whether the following question is true or false. Support your answer with brief explanation. (a) A project's Net Present Value is determined

Question One State whether the following question is true or false. Support your answer with brief explanation. (a) A project's Net Present Value is determined by considering the project's cash inflows and cash outflows discounted to their present values using appropriate interest rate. [2 marks] (b) The Internal Rate of Return (IRR) determines the rate of discount at which the present value of the future cash flows will exceed the initial investment. [2 marks] (c) Payback Period appraisal method does not pay attention to cash inflows after the payback period. True (d) A Profitability Index of 1.5 means that the project's NPV is less than zero. [2 marks] (e) Project X has an expected cash flow of K2,000 and a standard deviation of 400 . Project Y has an expected cash flow of K1,000 and a standard deviation of 400 . Thus, we can conclude that project Y is riskier than project X. [2 marks]

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