If You Were Evaluating Two Mutually Exclusive Projects for a Firm

question 102

True/False

If you were evaluating two mutually exclusive projects for a firm with a zero cost of capital, the payback method and NPV method would always lead to the same decision on which project to undertake.

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Definitions:

Financing Activities

Transactions that involve raising capital, repaying investors, and altering the capital structure of the organization among other financing-related decisions.

Issuing Debt

The act of a corporation or governmental entity raising money by selling bonds or notes to investors.

Cash Dividends

Payments made by a company to its shareholders from its profit or retained earnings.

Statement Of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives.