31. When conducting net present value analysis in a for-profit corporation, the

Question

31. When conducting net present value analysis in a for-profit corporation, the focus is on incremental cash flow; therefore, depreciation can be ignored because it is a non-cash expense. a. True b. False

32. As long as a firm is confident that risk has been adequately incorporated in a capital budgeting analysis, the rule of thumb is to accept only projects with a positive net present value.

a. True

b. False

33. In a capital rationing situation, the profitability index may be used in place of net present value to choose among projects.

a. True

b. False

Explanation / Answer

31. b. False

32. a. True

33. a. True

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