Which of the following investment rules may not use all possible cash flows in its calculation? A Profitability index. B) Net present value. (C) Payback period. D Internal rate of return.
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- The relationship between NPV and IRR is such thata. both approaches always provide the same ranking of alternative investment projects.b. the IRR of a project is equal to the firm's cost of capital if the NPV of a project is $0.c. if the NPV of a project is negative, the IRR must be greater than the cost of capital.d. none of the aboveWhen two mutually exclusive projects are being compared, explain whythe short-term project might be ranked higher under the NPV criterion ifthe cost of capital is high, whereas the long-term project might be deemedbetter if the cost of capital is low. Would changes in the cost of capital evercause a change in the IRR ranking of two such projects? Why or why not?Which of the following statement is correct Select one: a. A project is accepted when profitability index will be greater than one b. All statements are correct c. A project is accepted when net present value is greater than zero d. A project is accepted when payback period is less than the other project
- c) If both the projects have recorded a positive NPV value and the projects are mutually exclusive, which projects would you recommend for FB Company to undertake? Why?In mutually exclusive projects, a firm will evaluate all alternatives and select the best project that contributes the most to the value of the firm. Select one: O True O FalseWhich statemen is true? A. IRR and NPV always lead to the same decision about projects. B. Discounted payback period is most likely greater than the payback period. C. A project with a non-standard cash flow can have multiple IRRs, all of them being valid. D. Looking at 2 mutually exclusive projects, higher IRR means a better project.
- What do you know about the mathematical value of the internal rate of return of a project under each of the following conditions? a.The future worth of the project is equal to zero. b. The future worth of the project is less than zero.Which of the following is TRUE about NPV? LO3 NPV is the ratio of a project's present value to the amount of resources consumed in generating it. O NPV is the rate at which IRR equals $0. O NPV and IRR are equally reliable investment decision rules when evaluating mutually exclusive projects. O NPV is the difference between the present value of the benefits and the present value of the costs of a project.If the projects are mutually exclusive, highest payback period project will accept normally. a. True b. False
- We should accept a project if the Net Present Value is positive and the Internal Rate of Return is higher than the cost of capital. What are the reasons for that, what this means?What do we call the cost of capital at which the two projects have the same NPV?If a particular project has multiples rates of return (i.e., multiple values of IRR), it means that the project is economically more attractive as compared with a project with a single IRR. Group of answer choices True False