There Is no correlation between net present value and Internal rate of return. A project with a positive net present value will have a discount rate that Is greater than the Internal rate of return. None of the statements are true Given several projects with positive net present values, the company should choose the project with the highest net present value. A profect with a positive net present value wil have a discount rate that Is less than the Internal rate of return.

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The internal rate of return (IRR) is the: Multiple Choice discount rate that results in a zero net present value for the project. discount rate that causes a project's aftertax income to equal zero.

2) The expected return of Project Y is at least equal to the expected return of Project X, and the variance of Y is less than that of X. What would you do? A) Prefer Project Y   B) Accept both projects C) Prefer Project X   D) Reject both projects.

If the net present value of a project is zero based on a discount rate of 16%, then the internal rate of return is: Select one: O a. equal to 16% O b. greater than 16% O c. less than 16% O d. cannot be determined from this data

Which of the following is FALSE regarding scenario analysis? Scenario analysis ignores diversification that exists if the project is part of a larger firm  Scenario analysis provides a range of outcomes Scenario analysis assumes all "bad" values occur simultaneously and all "good" values occur simultaneously The decision rule for scenario analysis is to accept the project if the range of the outcomes is less than 30% of the base outcome Scenario analysis examines a best case, worst case, and base case situation

Indicate whether its True or False. Then write the explanation!   The twin advantages with using the IRR method as opposed to the NPV method for project evaluation is that you don’t need to worry about what an appropriate risk- adjusted discount rate might be for the project and you will always get the correct answer to the investment decision.

In a few sentences, answer the following question as completely as you can. According to your textbook, “an investment should be accepted if the net present value is positive and rejected if it is negative” (p. 239). What does an NPV of zero mean?If you were a financial decision maker facing a project with NPV of zero (or close to zero) what would you do? Can you think of any other factors that might influence your decision?

I think question 3 is not answered clearly.  If Project A is rejected due to negative NPV, then all positive NPVs projects should be accepted.  The answer is not clear. Please correct me if I am missing something.    Question 3) If the firm uses the discounted-payback rule, will it accept any negative NPV projects? Will it turn down any positive NPV projects? How do you know?    Your answer is:  No Due to Project A's negative NPV, it cannot cover the initial investment within its useful life. Will it turn down any positive NPV projects? It will reject projects with positive NPVs but not those with negative NPVs. If all potential cash flows are taken into account but the project still doesn't reach the designated cutoff point, the NPV can still be positive.

Which of the following statements is correct?   a. Since investors prefer more return and less risk, one will never hold a dominated asset in the risk-return sense. In other words, if asset A has a higher expected return and lower standard-deviation than asset B, then investors would only hold asset A in their optimal portfolio.   b. The IRR method correctly ranks mutually exclusive projects.   c. When an investment project is evaluated today, the spending that occurred in the last year has to be included in the NPV analysis.   d. The payback period criterion properly considers the time value of money.   e. When there are two mutually exclusive projects, the project with the highest NPV should be chosen.