Using internal rate of return a conventional project

53. Using internal rate of return, a conventional project should be accepted if the internal rate
of return is:
A. equal to the discount rate.
B. greater than the discount rate.
C. less than the discount rate.
D. negative.
E. positive.
54. The internal rate of return may be defined as:
55. The problem of multiple IRRs can occur when:
56. The elements that cause problems with the use of the IRR in projects that are mutually
exclusive are:
5-15

Chapter 05 - Net Present Value and Other Investment Rules
57. If there is a conflict between mutually exclusive projects due to the IRR, one should:
A. drop the two projects immediately.
B. spend more money on gathering information.
C. depend on the NPV as it will always provide the most value.
D. depend on the payback because it does not suffer from these same problems.
E. None of the above.
58. The profitability index is the ratio of:
59. Which of the following statement is true?
60. Graham and Harvey (2001) found that ___ and ___ were the two most popular capital
budgeting methods.

Chapter 05 - Net Present Value and Other Investment Rules