for the following assignment answer the following statements Discounting involve

Question

for the following assignment answer the following statements Discounting involves calculating the present values of future amounts. A) True B) False 2. Compounding an annuity involves calcualting the future value of a series of payments over time. A) True B) False 3. All else being equal as interest rates rise, present values fall. A) True B) False 4. Net present values can't be negative. A) True B) False 5. IRR calculations measure how long it takes to recover the cost of a capital expenditure. A) True B) False 6. If investment options are mutually exclusive, selecting one will automatically prevent the selection of another, even if profitable. A) True B) False 7. When capital is rationed, there is no predetermined limit on spending. A) True B) False 8. Net present value profile calcualtions assume constant discount rates. A) True B) False 9. At a zero discount rate, present and future values are the same. A) True B) False 10. At 14.33%, the NPV of investment B in Figure 12-2 on page 396 is zero. A) True B) False 11. As a capital budgeting technique, the payback method does not emphasize liquidity. A) True B) False 12. Caital budgeting decisions should involve an analysis of cash flow. A) True B) False 13. Analysis of Figure 12-3 on page 397 indicates that the NPV of investment C is less than the NPV of investment B below the crossover point of roughtly 8.7%. A) True B) False 14. Depreciation is not a tax deductible expense.. A) True B) False 15. Given earnings before depreciation and taxes of $180,000, depreciation of $60,000, and a tax rate of 35%, cash flow would be $138,000. A) True B) False 16. Elective expensing can be an alternative to depreciaton. A) True B) False 17. Research suggests that most small businesses use either the IRR or NPV methods to budget capital. A) True B) False 18. When the NPV of an investment is zero, IRR equal cost of capital. A) True B) False 19. All else being equal, compounding interest will increase future values. A) True B) False 20. As a capital budgeting technique, payback is not considered theoretically sound. A) True B) False 21. Every investment with a postive NPV should be made. A) True B) False 22. Any investment with an IRR ecxeeding cost of capital should always be made. A) True B) False 23. Capital budgeting decisions are frequestly made using cost of capital as the discount rate. A) True B) False 24. Purchasing expensive equipment is a capital budgeting decison. A) True B) False 25. MACRS is a common capital budgeting technique used to rank investment alternatives. A) True B) False 26. All else being equal, as interest rates fall, future values decline. A) True B) False 27. Ordinary annual annuities would either paid or received at the end of the year. A) True B) False 28. The final payment or receipt of an ordinary annual annuity would not have the chance to compound. A) True B) False 29. In formula 9-7 on page 274, i would be .025 or 2.5% if interest compounded quarterly. A) True B) False 30. Our authors suggest that financial analysts use MIRR to budget capital more often than either NPV or IRR. A) True B) False

Explanation / Answer

As per Chegg guidelines I am giving the answers of first 4 questions only. Please find below my answers:

1. Discounting involves calculating the present values of future amounts: True

2. Compounding an annuity involves calculating the future value of a series of payments over time.: False

3. All else being equal as interest rates rise, present values fall.: False

4. Net present values can't be negative.: True, But it in case of negative project can’t be accepted.

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