When ONLY ONE capital budgeting method is used to evaluate projects, most analysts suggest that it should be

1. 	a.	Profitability Index (PI)
   	b.	Modified Internal Rate of Return (MIRR)
   	c.	Net Present Value (NPV)
   	d.	Discounted Payback (DPB) Which of the following statements is TRUE?

   1. a.

      Undertaking a project with a POSITIVE NPV always adds value to a firm.

      b.

      The IRR is the discount rate used to determine a project's Net Present Value (NPV)

      c.

      The Payback (PB) method is usually the final determinant in the capital budgeting decision making process

      d.

      The IRR and MIRR models ALWAYS yield the same accept/reject project decision

      1. Which of the following is NOT TRUE about the PAYBACK decision methodology?

         Answer

         a.

         It IGNORES the Time Value of Money

         b.

         It IGNORES Cash Flow AFTER the calculated payback period

         c.

         It is biased in favor of projects with BACK LOADED cash flows

         d.

         It is simple and easy to understand

         Project B requires an Initial (Year 0) Investment of $5,000,000; and will return $1,155,000 for each year of its five year useful life. If the projects required rate of return is 14%, what is the Net Present Value (NPV) of the Project B?

         a.-$1,034,791.00 c.-$1,232,100.41

         d.-$884,500.56

         b.

         $ 1,842,777.21

         .