Which of these methods can be used in nontraditional cash fl

Which of these methods can be used in non-traditional cash flows? a) IRR (Internal Rate of Return) b) NPV (Net Present Value) c) Payback Period d) Bond Save Question 2 (2 points) Tax Liability can be used to evaluate economic desirability of a single investment or project. a) True b) False Save Question 3 (2 points) What is true about Nonlinear break even models? a) Occur when one or more components in the profit equation are not linear b) Usually require some use of calculus c) Use the same basic approach as linear models; that is, profit is equal to the gross income minus total costs d) Do not use the same basic approach as linear models e) a, b, & c above f) a & d above

Solution

Q.1. Option a. Since under non-traditional cash flow, there would be more than one change in the cash flow directions which would lead to multiple internal rates which cannot be handled using NPV.
Q.2. True. As tax liability is debt to tax authorities which needs to considered while deciding the desirability of investment
Q.3. Option f. As there would be multiple variables while determining cost and revenue functions