11.If two projects have the same risks, the same payback periods, and the same initial investments, they are equally attractive.
12.A shorter payback period reduces the company's ability to respond to unanticipated changes and increases the risk of having to keep an unprofitable investment.
13.If the straight-line depreciation method is used, the annual average investment amount used in calculating rate of return is calculated as (beginning book value + ending book value)/2.
14.The accounting rate of return is based on cash flows rather than net income in its calculation.
15.If net present values are used to evaluate two investments that have equal costs and equal total cash flows, the one with more cash flows in the early years has the higher net present value.
16.The net present value decision rule is: When an asset's expected cash flows yield a positive net present value when discounted at the required rate of return, the asset should be acquired.
17.The internal rate of return equals the rate that yields a net present value of zero for an investment.
18.The internal rate of return method of evaluating capital investments cannot be used with uneven cash flows.
19.There is only one method of evaluating capital budgeting decisions.
20.Capital budgeting decisions are risky because the outcome is uncertain, large amounts are usually involved, the investment involves a long-term commitment, and the decision could be difficult or impossible to reverse.