Grade Details
1.
Question:
Which of the following statements is incorrect?
Your Answer:
A. Assuming a project has normal cash flows, the NPV will be
positive if the IRR is less than than the cost of capital.
CORRECT
B. If the muliple IRR problem does not exist, any independent project
acceptable by the NPV method will also be acceptable by the IRR method.
C. If IRR= r (the cost of capital), the NPV = 0.
D. NPV can be negative if the IRR is positive.
E. The NPV method is not affected by the multiple IRR problem.
Instructor Explanation: Statement A is the incorrect statement. NPV is positive if IRR is
greater than the cost of capital. Points Received:
6 of 6
Comments:
2.
Question:
Which of the following statements is most correct?
Your Answer:
A. If a project with normal cash flows has an IRR which exceeds the
cost of capital, then the project must have a positive NPV.
CORRECT
B. If the IRR of project A exceeds the IRR of project B, then project A
must also have a higher NPV.
C. The modified internal rate of return (MIRR) can never exceed the IRR.
D. Answers A and C are correct.
E. None of the answers above is correct.
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 Spring '09
 WATSON
 Cost Of Capital, Net Present Value, multiple IRR problem

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