31) The NPV method computes the present value of all expected future cash flows from a project using a maximum desired rate of return.
32) Under the NPV method, the higher the risk of a project, the lower the desired rate of return.
33) The minimum desired rate of return for an investment under the NPV method is based on the cost of capital.
34) If a company accepts a project with a positive NPV, the project will increase the value of the firm.
35) When choosing among several investments, managers should pick the project with the lowest net present value.
36) The lower the minimum desired rate of return, the lower the present value of each future cash inflow from an investment.
37) When using an NPV model, a world of uncertainty is assumed.
38) When using the NPV model, it is assumed that the capital markets are perfect.
39) In the absence of taxes, depreciation expense on a long-term asset is a relevant cash flow for the NPV model.
40) The IRR model determines the interest rate at which the NPV of an investment equals zero.
41) If the internal rate of return on a project is less than the minimum desired rate of return, the project is not desirable.
42) If the internal rate of return on a project exceeds the minimum desired rate of return, then the NPV is positive.
43) Howell Company has the following information:
Project 1 Project 2 Project 3
Number of years51015
Amount of annual cash inflow$10,000B$5,000
Required initial investmentA$30,000$32,000
Minimum desired rate of return8%12%8%
Net present value$0$3,900C
Present value factor for an ordinary annuity at 8% and 5 periods3.9927
Present value factor for an ordinary annuity at 8% and 15 periods8.5595
Present value factor for an ordinary annuity at 12% and 10 periods5.6502
Present value of one at 8% and 5 periods0.6806
Present value of one at 8% and 15 periods0.3152
Present value of one at 12% and 10 periods0.3220
Determine the missing amounts. Ignore income taxes.