1. When converting from net cash inflows to operating income,


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1. When converting from net cash inflows to operating income, depreciation is: A. not considered in the computation. B. subtracted from net cash inflows. C. added to net cash inflows. D. subtracted from operating income. 2. Which of the following statements is correct if the net present value of the investment is positive and the company is not under the constraint of capital rationing? A. Compute the proposals IRR. B. Compare the proposal to other proposals using the profitability index. C. Reject the proposal. D. Accept the proposal. 3. Ranking mutually exclusive investment proposals on the basis of IRR, NPV, and profitability index methods __________ give similar results. A. will generally B. will always C. may D. will never

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