1. Which one of these methods uses accounting values rather than financial values?
[A] AAR
[B] IRR
[C] NPV
2. An investment should be accepted if the NPV is positive and rejected if it is negative.
[A] True
[B] False
3. The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the:
[A] net present value.
[B] payback period.
[C] internal rate of return.
4. An investment is acceptable if its average accounting return (AAR):
[A] exceeds the target AAR.
[B] is less than the target AAR.
5. The discount rate that makes the net present value of an investment exactly equal to zero is called the internal rate of return.
[A] True
[B] False