PARTI:8 TRUE/FALSE QUESTIONS (16%) 1) A major disadvantage of the NPV model is t

Question

PARTI:8 TRUE/FALSE QUESTIONS (16%) 1) A major disadvantage of the NPV model is that fails to take into account TVM. 2) The depreciation expense is subtracted from the NI of a company to find the 3) Capital budgeting is at the heart of corporate finance because it is concerned with 4) The payback period method (PB) is a modification of the NPV to produce the True or False? operating cash flow. True or False? making the best choices about project selection. True or False? ratio of the PV of the future cash inflows to the PV of the costs. True or False?

Explanation / Answer

1) False. NPV considers TVM.

2) False. Depreciation is added back in NI

3) True

4) False. It is known as Profitability index.

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