TRUE or FALSE

O O 1. It is correct to say that the payback period (PP) method ignores the time value of money.

O O 2.No project can have more than one internal rate of return (IRR).

O O 3. A project's equivalent annual annuity (EAA) is expressed in dollars.

O O 4. When the IRR serves as the discount rate, the net present value (NPV) = $0.

O O 5.A project should be accepted if its profitability index (PI) > 0.

O O 6. The IRR assumes that all interim cash flows are reinvested at the IRR.

O O 7. To graph the IRR, NPVs are arrayed along the vertical axis.

O O 8. If the payback period is 3 years and the cutoff period is 4 years, the project should be rejected.

O O 9. When calculating a project's NPV, it is fair to assume that the cost is already a present value.

O O 10. It is fair to rank projects from best to worst solely on their respective NPVs.

O O 11. If a project's NPV is equal to zero, the PI must also equal zero.

O O 12. The EAA is a useful measure even if the projects are not mutually exclusive.

O O 13. The greater a project's discount (or required) rate, the greater its NPV will be.

O O 14. The first step when solving for the modified IRR (MIRR) is to calculate the present value of the cash inflows.

O O 15. A project is acceptable when its hurdle rate < its IRR.

O O 16.It is not fair to say that all capital budgeting methods have an accept-reject criterion.

O O 17. A project costing $1000 and returning $450 annually for three will have a NPV > $0 if the discount rate = 15%.

O O 18. If the discount rate is 15%, the profitability index of the project in #17 < 1.

O O 19. The project in #17 has a payback period < 2.5 years.

O O 20. When the NPV > $0, it is fair to assume that the IRR > the hurdle rate.