Multiple choice

1. The cost of capital is a single rate that reflects the average return paid to investors who provide the firm's capital. 

2. Although the NPV method is technically superior, the IRR method is used more frequently. 

3. Which of the following is not a cash flow consideration in evaluating capital budgeting projects? 

4. Because depreciation is a non-cash expense item, it is not necessary to consider depreciation in estimating cash flows for a new capital project.