Reference no: EM132595124

Question 1: The cash flows of a project should:

Multiple Choice

Option 1: include all sunk costs and opportunity costs.

Option 2: include all financing costs related to new debt acquired to finance the project.

Option 3: be applied to the year when the related expense or income is recognized by GAAP.

Option 4: be computed on a pretax basis.

Option 5: include all incremental and opportunity costs.

Question 2: If you want to increase your purchasing power by investing in a bond, then:

Multiple Choice

Option 1: you should purchase a premium bond.

Option 2: you must earn a positive real rate of return on that bond.

Option 3: the nominal rate of return must equal or exceed the rate of inflation.

Option 4: you must purchase that bond at a discount.

Option 5: the nominal rate of return on that bond must be less than the inflation rate.