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