1) Which of the following capital-budgeting decision criteria are correct? a. Ac
ID: 2669372 • Letter: 1
Question
1) Which of the following capital-budgeting decision criteria are correct?a. Accept projects that have a positive NPV.
b. Accept projects that generate an IRR that is greater than the firm’s discount rate.
c. Accept projects that have a profitability index of greater than 1.0.
d. Accept projects that generate an MIRR that is greater than the firm’s discount rate.
e. All of the above are correct.
2) What does the term "firm value" refer to?
a. Common stockholders’ equity minus preferred stockholders’ equity
b. Goodwill
c. The market value of the firm’s outstanding debt and equity securities
d. Net book value
Explanation / Answer
1) Which of the following capital-budgeting decision criteria are correct?
a. Accept projects that have a positive NPV.
b. Accept projects that generate an IRR that is greater than the firm’s discount rate.
c. Accept projects that have a profitability index of greater than 1.0.
d. Accept projects that generate an MIRR that is greater than the firm’s discount rate.
e. All of the above are correct.
2) What does the term "firm value" refer to?
a. Common stockholders’ equity minus preferred stockholders’ equity
b. Goodwill
c. The market value of the firm’s outstanding debt and equity securities
d. Net book value
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