Exam 7: Investment Decision Rules

Use the table for the question(s)below. Consider the following two projects: -Assume that projects A and B are mutually exclusive.The correct investment decision and the best rational for that decision is to:

The IRR for this project is closest to:

Use the table for the question(s)below. Consider the following two projects: -The internal rate of return (IRR)for project Alpha is closest to:

Which of the following statements is FALSE?

Which of the following statements is FALSE?

Which of the following statements is FALSE?

Assuming that your capital is constrained,which project should you invest in first?

Use the information for the question(s)below. Larry the Cucumber has been offered $14 million to star in the lead role of the next three Larry Boy adventure movies.If Larry takes this offer,he will have to forgo acting in other Veggie movies that would pay him $5 million at the end of each of the next three years.Assume Larry's personal cost of capital is 10% per year. -The NPV of Larry's three movie Larry Boy offer is closest to:

Consider two mutually exclusive projects A & B.If you subtract the cash flows of opportunity B from the cash flows of opportunity A,then you should:

When using the internal rate of return (IRR)investment rule,we compare:

The payback period for project Beta is closest to:

Larry should:

Use the table for the question(s)below. Consider the following two projects: -The profitability index for project A is closest to:

Use the following information to answer the question(s)below. Rearden Metals is considering opening a strip mining operation to provide some of the raw materials needed in producing Rearden metal.The initial purchase of the land and the associated costs of opening up mining operations will cost $100 million today.The mine is expected to generate $16 million worth of ore per year for the next 12 years.At the end of the 12th year Rearden will need to spend $20 million to restore the land to its original pristine nature appearance. -The number of potential IRRs that exist for Rearden's mining operation is equal to:

Which of the following statements is FALSE?

The maximum number of incremental IRRs that could exist for project B over project A is:

Which of the following statements is FALSE?

Use the table for the question(s)below. Consider a project with the following cash flows: -Assume the appropriate discount rate for this project is 15%.The payback period for this project is closest to:

Use the information for the question(s)below. Larry the Cucumber has been offered $14 million to star in the lead role of the next three Larry Boy adventure movies.If Larry takes this offer,he will have to forgo acting in other Veggie movies that would pay him $5 million at the end of each of the next three years.Assume Larry's personal cost of capital is 10% per year. -The IRR for Larry's three movie deal offer is closest to:

Use the table for the question(s)below. Consider a project with the following cash flows: -Assume the appropriate discount rate for this project is 15%.The profitability index for this project is closest to: