CAPITAL BUDGETING SCREENING DECISION MAKING THEORY HOMEWORK QUESTIONS

NOTE: The objective of SCREENING DECISION THEORY QUESTIONS is to ensure that you know when a project is either ACCEPTABLE or UNACCEPTABLE. Therefore, all of your answers will be in terms of either (1) less than, (2) greater than, or (3) equal to.

If a project generates a NPV of $(2,000), its PI will be equal to?

If a project generates a NPV of $800, its PI will be equal to?

If a project generates a NPV of $0, its PI will be equal to?

If the IRR = 12% and the NPV = $0, what is true about the hurdle rate?

If the IRR = 12% and the NPV = $(1,000), what is true about the hurdle rate?

If the IRR = 12% and the NPV = $4,000, what is true about the hurdle rate?

If the PI = 1.14 and the IRR = 10%, what is true about the hurdle rate?

If the PI = .88 and the IRR = 10%, what is true about the hurdle rate?

If the PI = 1.00 and the IRR = 10%, what is true about the hurdle rate?