39.Which of the following are elements of the internal rate of return method of analysis?I.the timing of the cash flowsII.the cutoff point after which any future cash flows are ignoredIII.the rate designated as the minimum acceptable rate for a project to be acceptedIV.the initial cost of an investment
a.I and II onlyb.III and IV onlyc.I, II, and III onlyd.I, III, and IV onlye.II, III, and IV onlyINTERNAL RATE OF RETURNa
40.The internal rate of return tends to be:
CROSSOVER POINTe41.You are trying to determine whether to accept project A or project B. These projects are mutually exclusive. As part of your analysis, you should compute the crossover point by determining:

CROSSOVER POINTc
42.You are comparing two mutually exclusive projects. The crossover point is 9 percent. You determine that you should accept project A if the required return is 6 percent. This implies that you should:I.reject project B if the required return is 6 percent.II.always accept project A and always reject project B.III.always reject project A any time the discount rate is greater than 9 percent.IV.accept project A any time the discount rate is less than 9 percent.
CROSSOVER POINTb
43.Graphing the crossover point helps explain:
a.why one project is always superior to another project.b.how decisions concerning mutually exclusive projects are derived.c.how the duration of a project affects the decision as to which project to accept.d.how the net present value and the initial cash outflow of a project are related.e.how the profitability index and the net present value are related.PROFITABILITY INDEX
d

#### You've reached the end of your free preview.

Want to read all 44 pages?

- Summer '13
- hodges
- Finance, Net Present Value