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A major difference between the net present value and internal rate of return is the interest factor.​

In general, banks prefer loans that stress liquidity and safety.

In general, banks prefer loans that stress liquidity and safety.

If the cost of capital exceeds the internal rate of return, the firm should not make the investment.​

If the cost of capital exceeds the internal rate of return, the firm should not make the investment.​

Debt financing​ 1. increases stockholders’ return more than an equal dollar amount of preferred stock 2. increases stockholders’ return less than an equal dollar amount of preferred stock3. is less risky to the investor than preferred stock4. is more risky to the investor than preferred stock

A firm’s earnings are not determined by the cash budget but are determined by the income statement.​

The internal rate of return method of capital budgeting permits a ranking of investment proposals.​

​A firm should not make an investment if 1. its net present value is positive 2. its net present value is negative 3. the internal rate of return exceeds the cost of capital 4. the internal rate of return is less than the cost of capital    

​A firm should not make an investment if 1. its net present value is positive 2. its net present value is negative 3. the internal rate of return exceeds the cost of capital 4. the internal rate of return is less than the cost of capital