Which of the following statements about these investments is true?A)The investor should take investment A since it has a greater net present value (NPV).B)The investor should take investment A since it has a greater internal rate of return(IRR).C)The investor should take investment B since it has a greater net present value (NPV).D)The investor should take investment B since it has a greater internal rate of return(IRR).Answer: CExplanation: C) Using a financial calculator, NPV(A) = -$0.002 million, IRR(A) =8.896%, NPV(B) = $0.027, IRR(B) = 10.652%;Use NPV to decide mutually exclusive projects.

(23) Mary is in contract negotiations with a publishing house for her new novel. She hastwo options. She may be paid $100,000 up front, and receive royalties that are expected tototal$26,000 at the end of each of the next five years. Alternatively, she can receive $200,000 upfront and no royalties. According to the NPV rule, which of the two deals should she choose,given a discount rate of 8%?

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(24) A project has the following expected cash flows:Project AYear 0-$35,000Year 1$0Year 2$11,000Year 3$13,500Year 4$13,500Year 5$2,500Which of the following investment rules would indicate that she should take the former deal,given a discount rate of 8%?Rule I: The Net Present Value ruleRule II: The Payback Rule with a payback deadline of 4 yearsRule III: The internal rate of return (IRR) Rule

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