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11.Britney is evaluating capital investments for three firms. The first firm has an unlimited capital budget and is looking at four independent projects. The second firm has several perfectly divisible potential projects, but faces capital rationing. The third firm is trying to decide between mutually exclusive projects. The best capital budgeting techniques for these situations would be __________, __________, and __________, respectively.a.IRR; NPV; PIb.NPV; PI; NPVc.NPV; IRR; NPVd.PI; PI; NPVe.NPV; NPV; IRRANS:BPTS:1REF:7.3 - 7.5OBJ:TYPE: application of concepts12.Decisions-Decisions, Inc. is evaluating three potential projects. Given the information in the table below, the fact that the firm can invest no more than $30 million, and the hurdle rate is i%, the firm should invest in:YearProjects ($ in millions)1230c1c2c31cf1cf3cf52cf2cf4cf6NPVnpv1npv2npv3
The highest NPV is $ans million, thus the firm should invest in projects 1 and 2.PTS:1REF:7.5OBJ:TYPE: application of concepts13.The __________ provides a direct estimate of the increase or decrease in shareholder value resulting from a particular investment.14.The output of __________ analysis is a single, intuitively appealing number representing the compound annual return that an investment earns over its life.15.How many IRRs may result from three sign changes in the cash flow stream?a.1b.2c.3d.4e.an imaginary number of IRRsANS: CPTS:1REF:7.4OBJ:TYPE: application of concepts16.Identify the problem that the internal rate of return (IRR) and profitability index (PI) share as an important flaw.
17.All of the following are commonly cited problems with the internal rate of return (IRR) technique EXCEPT: