## Objective Types Questions

July 6, 2016

**Objective Types Questions in $7 only**

1. Which statement is CORRECT?

a) The IRR method assumes that Cash flows are reinvested at the firm’s WACC

b) The use of Accelerated Depreciation methods (instead of Straight-Line) results in higher operating cash flows in a projects early years.

c) For independent projects with normal cash flows, the NPV, Payback and IRR methods will always lead to the same decision.

d) For normal projects, lower costs of capital lead to lower NPVs.

2. Which of the following is true for normal projects if the cost of capital is positive?

a) If a project’s IRR is positive, then its NPV will always be positive

b) If a project’s NPV is negative, then its Modified IRR will be negative

c) If a project’s NPV is positive, then its Profitability Index will always be positive

d) If a project’s IRR is positive, then its Discounted Payback Period will exist