Which of the Following Statements Is FALSE

question 25

Multiple Choice

Which of the following statements is FALSE?

• A)The break-even level of an input is the level for which the investment has an internal rate of return (IRR)of zero.
• B)The most difficult part of capital budgeting is deciding how to estimate the cash flows and the cost of capital.
• C)When evaluating a capital budgeting project,financial managers should make the decision that maximizes net present value (NPV).
• D)Sensitivity analysis reveals which aspects of the project are most critical when we are actually managing the project.

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Definitions:

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Income

The monetary payment received for one's work, investments, or other sources, primarily used for personal consumption, savings, and investment.

Present Value

The present value of an expected amount of money or sequence of cash flows, with a given return rate.

Interest Rate

The percentage at which interest is paid by borrowers for the use of money they borrow from a lender.