1) For the NPV criteria a project is acceptable if the NPV is __________ while for the profitability index a project is acceptable if the profitability index is __________. A. less than zero greater than the required return B. greater than zero greater than oneC. greater than one greater than zeroD. greater than zero less than one 2) Which of the following is considered to be a deficiency of the IRR? A. It fails to properly rank capital projects.B. It could produce more than one rate of return.C. It fails to utilize the time value of money. D. It is not useful in accounting for risk in capital budgeting. 3) The firm should accept independent projects if A. the payback is less than the IRRB. the profitability index is greater than 1.0C. the IRR is positive D. the NPV is greater than the discounted payback 4) The most expensive source of capital is A. preferred stock B. new common stockC. debtD. retained earnings

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