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8.Projects X and Y (with unique investments at time 0 followed by positive cash flows over identical lives) have the same NPV when the discount rate is zero. However, project X has lar- ger cash flows in the early years of its life than project Y. Therefore, at all discount rates greater than zero, project Y will have a greater NPV than that of project X a)Tb) F 9.The dividend yield ratio is calculated by dividing the curent dividend, D1, by the current market price of the share, P1 b) F 10. When assessing the weighted-average cost of capital, some financing sources to be considered include preferred shares, common shares and retained eamings. a)Tb) F 11 Because the Return on Total Assets (RTA) measures the firm's effective utilisation of assets (without considering how these assets are financed), two firms with the same Eamings before Interest and Taxes must have the same RTA. a)Tb) F 12 You are to choose the most economical project from a series of mutually exclusive pro- jects that have identical capital expenditures and lives. The project that should be chosen is the one with the highest internal rate of retum. a)Tb) F 13. If sales decrease and financial leverage increases, we can say with certainty that the profit margin will decrease a)T b) F 14. The following five balance sheet accounts are considered sources of funds. Increase in cash increase in accounts receivable; increase in accounts payable increase in goodwill increase in inventory a)Tb) F

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