True OR False

1- The payback method is most appropriate for projects whose cash flows do not extend far into the future. ( )

2- In the payback method, depreciation is added back to net operating income when computing the annual net cash flow. ( )

3- When discounted cash flow methods of capital budgeting are used, the working capital required for a project is ordinarily counted as a cash outflow at the beginning of the project and as a cash inflow at the end of the project. ( )

4- The net present value method assumes that cash flows from a project are immediately reinvested at a rate of return equal to the internal rate of return. ( )

5- The cost of capital is the average rate of return that the company earns on its investments. ( )

6- The salvage value of new equipment should not be considered when using the internal rate of return method to evaluate a project. ( )

7- The minimum required rate of return is the discount rate that makes the net present value of the project equal to zero. ( )

8- If the salvage value of equipment at the end of a project is highly uncertain, the salvage value should be ignored in capital budgeting decisions. ( )

9- In preference decisions, the profitability index and internal rate of return methods will rank projects in the same order of preference. ( )

10- If investment funds are limited, the net present value of one project should not be compared directly to the net present value of another project unless the initial investments in these projects are equal.( )