A. The internal rate of return cannot be used to determine the acceptability of a project
that has financing type cash flows.
B. A project with investing type cash flows is acceptable if its internal rate of return
exceeds the required return.
C. A project with financing type cash flows is acceptable if its internal rate of return
exceeds the required return.
D. The net present value profile is upsloping for projects with both investing and
financing type cash flows.
E. Projects with financing type cash flows are acceptable only when the internal rate of
return is negative.
Which one of the following statements is correct?
A. A firm with a restrictive financing policy secures sufficient long-term financing to
fund all its assets.
B. A firm with a flexible financing policy frequently invests in marketable securities.
C. A firm with a flexible financing policy tends to use short-term financing on a
frequent basis.
D. Firms tend to avoid short-term financing under both restrictive and flexible financing
policies.
E. Firms with seasonal sales select flexible financing policies.
Scott is considering a project that will produce cash inflows of $2,100 a year for 4
years. The project has a 12 percent required rate of return and an initial cost of $5,000.
What is the discounted payback period?
A. 2.97 years
B. 3.11 years
C. 3.26 years
D. 4.38 years
E. never