The _____________ is defined as the net present value of an opportunity divided by the amount of the initial investment.

• discount rate
• net present value
• profitability index
• annual rate of return

If the internal rate of return is less than the rate of return you require on the investment, you ________ the investment.

• reject
• accept
• consider
• pay

We can effectively use the NPV method to rank projects

• True
• False

__________ is the discount rate at which the net present value equals zero.

• NPV
• CAPM
• ARR
• IRR

If the net present value is greater than zero, it is an investment that you should make.

• True
• False

Dividends, interest, rents, or other income can be ___________.

• discount rates
• managerial accounting
• cash inflows
• traditional financial accounting

Which of the following variables is required in the net present value formula?

• discount rate
• projections of expected cash flow from the investment over time
• initial investment amount
• All of the above.