67. An investment has the following cash flows. Should the project be accepted if it has been assigned a required return of 9.5%? Why or why not?A.yes; because the IRR exceeds the required return by about 0.39%.B. yes; because the IRR is less than the required return by about 3.9%.C. yes; because the IRR is positive.D. no; because the IRR exceeds the required return by about 3.9%.E. no; because the IRR is 9.89%.The project should be accepted because the IRR of 9.89% exceeds the required return of 9.5%.Difficulty level: MediumTopic: INTERNAL RATE OF RETURNType: PROBLEMS5-61

Chapter 05 - Net Present Value and Other Investment Rules68. You are considering two independent projects with the following cash flows. The required return for both projects is 10%. Given this information, which one of the following statements is correct?A. You should accept project B since it has the higher IRR and reject project A because you can not accept both projects.B. You should accept project A because it has the lower NPV and reject project B.C. You should accept project A because it has the higher NPV and you can not accept both projects.D. You should accept project B because it has the higher IRR and reject project A.E.You should accept both projects if the funds are available to do so since both NPV's are > 0.Since these are independent projects and both the IRR and NPV rules say accept, you should accept both projects if there are sufficient funds to do so.Difficulty level: MediumTopic: INTERNAL RATE OF RETURN AND NET PRESENT VALUEType: PROBLEMS5-62

Chapter 05 - Net Present Value and Other Investment Rules69. You are considering an investment with the following cash flows. If the required rate of return for this investment is 13.5%, should you accept it based solely on the internal rate of return rule? Why or why not?A. Yes; because the IRR exceeds the required return.B. Yes; because the IRR is a positive rate of return.C. No; because the IRR is less than the required return.D. No; because the IRR is a negative rate of return.E.You can not apply the IRR rule in this case because there are multiple IRRs.Since C03is a negative value resulting in more than one sign change, there are multiple IRRs. Thus, the IRR rule does not apply.Difficulty level: MediumTopic: INTERNAL RATE OF RETURNType: PROBLEMS5-63

Chapter 05 - Net Present Value and Other Investment Rules70. What is the profitability index for an investment with the following cash flows given a 9% required return?A. .96B. .98C. 1.00D.1.02E. 1.04Difficulty level: EasyTopic: PROFITABILITY INDEXType: PROBLEMS5-64

Chapter 05 - Net Present Value and Other Investment Rules