True or False? (please take your time)
a) The installation cost is added to the accumulated depreciation of an asset to get the initial capital investment.
b) Cogswell Cola needed to purchase additional inventory of plastic bottles to launch its Pulsar Cola. This decrease in inventory represents a positive cash flow associated with the project.
c) Opportunity costs add to a? project’s cash flows while erosion costs and synergy gains reduce those cash flows.
d) The NPV is the PV of all of a? project’s outflows minus thePFV of all inflows.
e) The NPV tells us the expected dollar impact of a proposed project on the value of a firm.
f) Excel’s NPV function treats CF in year 1 as the CF in year 2.
g) The capital budgeting rule is to accept a project if the IRR? > NPV.
h) Accept/reject decisions based on the IRR rule usually agree with those based on the NPV rule.
i) The Excel function that will yield the correct result without any modificaiton is the IRR function..
j) When the IRR exceeds the cost of capital, the NPV will be positive.
k) To be considered? acceptable, a project must have an NPV greater than 1.0.