Which one of the following capital-budgeting evaluation techniques is based on finding a discount rate which causes the net present value to be zero?

When the net present value is negative, the internal rate of return is less than the cost of capital.

The internal rate of return (IRR) is the discount rate that causes the net present value (NPV) to be zero.

The capital-budgeting evaluation technique that is based on finding a discount rate which causes the net present value to be zero is internal rate of return (IRR).

An examination of a firm’s opportunities, strengths, threats and weaknesses is often referred to by the acronym SWOT.

Capital budgeting is the process of identifying, evaluating, and implementing a firm’s investment opportunities.

The relevant cash flows of a project do not include sunk costs.

The stage in the capital budgeting process in which projects that are accepted must be executed in a timely fashion is called the implementation stage.

The capital-budgeting process starts with the identification stage.

The corporate planning tool that develops project plans that fit well with the firm’s plans is often referred to by the acronym GOMS (Goals, Objectives, Methods, and Standards).

When the net present value for a project is negative, the internal rate of return is less than the cost of capital.

Corporate debt as a percentage of GDP grew from around 35% in 1970 to nearly 50% in 2007.

The internal and sustainable growth rate relationships suggest that there are three measurable influences on growth. The exception is profitability.

The initial impact of increasing the use of debt is to lower the cost of capital.

The concept that is different from the other three is net profit margin.

When retained earnings are used up and new common stock is issued, we know that the cost of equity has increased.

The firm’s target capital structure is consistent with minimum weighted average cost of capital.

A firm’s degree of combined leverage can be measured as degree of operating leverage plus the degree of financial leverage.

Target and optimum capital structures should be the same.

The cost of debt is typically higher than the cost of preferred stock, and must be adjusted to an after-tax cost.