Question: True or False: The underlying problem with the IRR approach is that it assumes that the cash flows are reinvested at the required return. ______

True or False: The underlying problem with the IRR approach is that it assumes that the cash flows are reinvested at the required return.

______ Cash flow is the increase in cash generated by a new project above the current cash flow without the new project.

A. Future

B. Current

C. Discounted

D. Incremental

Which one of the following statements is correct concerning MACRS?

A. A fixed asset classified as 5-year property is depreciated to its zero over 6 years.

B. The depreciation %'s are applied to the book value of the asset.

C. The depreciation %'s are applied to the current market value each year.

D. A fixed asset classified as 3 year property is depreciated to 0 book value over 2 years.

_______ of a project are those that have already been incurred and cannot be recovered.

A. sunk costs

B. working capital costs

C. Erosion costs

D. Opportunity costs

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