1. The net present value method of capital budgeting analysis does all of the following except:
provide a specific anticipated rate of return.
incorporate risk into the analysis.
use all of a project's cash flows.
consider all relevant cash flow information.
discount all future cash flows.
2. Accepting a positive net present value (NPV) project:
guarantees all cash flow assumptions will be realized.
ignores the inherent risks within the project.
is expected to increase the stockholders’ value by the amount of the NPV.
indicates the project will pay back within the required period of time.
means the present value of the expected cash flows is equal to the project’s cost.