1. Which of the following statement is incorrect?
a. When the internal rate of return is less than this required rate of return, the project is rejected.
b. When NPV equals zero, the required rate of return, or discount rate used in the NPV calculation, is greater than the projected rate of return, IRR.
c. Most of the answers are correct.
d. The number of time periods it takes to cover the initial investment is called the payback period.
e. That number of time periods it takes for the positive cash flows to equal the amount of the initial investment is the payback period.
2. Which of the following is not a major stage in the capital budgeting process?
a. evaluating and selecting projects
b. assessing the interest rates on existing debt
c. none of the answers is correct
d. estimating the cash flows associated with the project
e. funding projects