True or false

1. IRR is the expected return that is forgone by investing in a project rather than in comparable financial securities.

_____2. Agency costs are incurred when the managers of a firm are not the owners.

_____3. One can use the discounted cash-flow formulas that are used to value common stocks in order to value entire businesses.

_____4. The NPV for a project should be calculated at the internal rate of return.

_____5. The opportunity cost of capital for a project is the rate of return foregone by investing in the project rather than in securities of equal risk.

_____6. Hard rationing is caused by limits on available funds imposed by the unavailability of funds in the capital market.

_____7. Facebook paying out dividend of $1.5 billion is considered an investment decision.

_____8. Inflation is the rate at which the value of a currency is falling and, consequently, the general level of prices for goods and services is rising.

_____9. When deciding on accepting or rejecting a project if a project is partially financed you need to subtract the debt proceeds and recognize the interest and principal payments.

____ 10. When real cash flows are used, real discount rate should be used.

____ 11. Sunk cost should be included in NPV analysis as it is still a cost incurred by the project.

____ 12. When calculating NPV we need to pay attention to depreciation as it reduces taxable income.

____ 13. Straight-line depreciation is used for IRS and accelerated depreciation is used for stockholders.

____ 14. IRR technique is inferior compared to payback period and discounted payback period method.

____ 15. Growth stock vs. income stock is based on how much of the stock price consist of PVGO.

____ 16. Working capital is the difference between short-term asset and short-term equity.

____ 17. The opportunity Cost of capital for a project is higher for safe investments than for risky ones.

____ 18. Payback technique to evaluate a project is still valuable as it is the simplest way to communicate an idea of project profitability.

____ 19. The financial goal of a corporation is to maximize the value of the firm for the shareholders.

____ 20. A stock's price is based on the expected present value, at the market capitalization rate, of all the stock's future earnings.