Select the five true statements from the list below:

Check All That Apply

• The payback period is the length of time it takes an investment to generate sufficient cash flows to offset total expenses.

• The NPV's of two mutually exclusive projects have the same value at the crossover point.

• Incremental cash flows are determined by comparing cash inflows with cash outflows.

• Interest expense is not included in the capital budgeting analysis, but the interest tax shield is.

• As depreciation increases, the amount of taxes paid decreases.

• If projects are mutually exclusive, they both can be accepted if the internal rate of return exceeds the required rate of return.

• Average accounting returns are based on book values and discounted cash flows.

• The IRR of projects with a positive NPV will always be higher than the discount rate used in calculating the NPV.

• One way to account for the riskiness of a project is to decrease the project's IRR.

• Sunk costs are excluded from a capital budgeting analysis because they are irrelevant to the project under consideration.

• If the payback exceeds the pre-determined threshold, the project should be accepted.

• Using a 10%, 15%, and 20% discount rate in analyzing a project's cash flows will generate three different NPV's.