1) Two or more products manufactured from a common input are known as:
a. Common costs.
b. Joint Products.
c. Joint costs.
d. Sunk costs.
2) If company has calculated a project profitability index of -0.015 for an investment project, then:
a. The project's internal rate of return is less than discount rate.
b. The project's internal rate of return is greater than discount rate.
c. The project's internal rate of return is equal to discount rate.
d. The relationship of internal rate of return and discount rate is impossible to determine from data given.
3) If internal rate of return of an investment in equipment is equal to discount rate:
a. The net present value of investment will be zero.
b. The payback period of investment will be equal to useful life of equipment.
c. Neither A nor B above will be true.
d. Both A and B above will be true.
4) If taxes are ignored, all of the following items are comprised in discounted cash flow analysis except:
a. Future operating cash savings.
b. Depreciation expense.
c. Future salvage value.
d. Investment in working capital.