Quiz Ch 11 – Evaluating Mutually Exclusive Projects, IRR, and Crossover Rates
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
Which statement is TRUE based on the provided information about Projects A and B?
Which statement is TRUE based on the provided information about Projects A and B?
Which statement is ACCURATE given the information about the projects’ evaluation?
Sort the bonds in terms of their responsiveness to fluctuations in interest rates, starting with the most reactive to the least reactive:
Which statement is correct for equally risky projects with standard cash flows?
True or false: Normal Projects S and L exhibit equivalent NPVs at a zero discount rate. Yet, Project S’s cash flows arrive sooner than those of L. Consequently, it is evident that at any discount rate greater than zero, Project L will possess a higher NPV.
True or false: When the IRR of normal Project X exceeds the IRR of mutually exclusive Project Y, and Project X has a positive NPV, the firm should always opt for Project X over Y.
True or false: The IRR for Project X exceeds that of Project Y, with both IRRs being positive. Additionally, the NPV of X surpasses the NPV of Y at the cost of capital. In the case of mutually exclusive projects, choosing Project X and proceeding with the investment is the definite course of action, assuming data reliability. In other words, constructing NPV profiles that would advise against accepting Project X is unfeasible.
Regarding macro risk exposure, what is accurate?
When evaluating mutually exclusive projects with IRRs exceeding the WACC, which statement is accurate regarding NPV and IRR conflicts?
Given specific project details, how do NPV and WACC variations affect the comparison between Projects A and B?