1. A major corporation is deciding where to move its corporate headquarters and is considering between Tulsa, OK, Seattle, WA, or Little Rock, AK. They will only select one. What kind of decision is this?

A. Accept/Reject decision

B. Conventional decision

C. Decision among mutually exclusive alternatives

D. Decision among alternatives with different length lives.

ii. Market interest rates (long term Treasuries) have gone up in the last few months from about 4% to 7%. You have had a long term Treasury Bond in your portfolio with a coupon rate of 5%. Which of the following is true about the market price of your Treasury bond?

A. It has gone from being priced above par to being priced below par.

B. It has gone from being priced below par to being priced above par.

C. It has gone from being above par to being further above par.

D. It has gone from being below par to being further below par.

iii. The required rate of return for a proect is 15%. The cash flows of the project are such that the project has two IRRs: 20% and 10%. Which of the following is true?

A. The project should be accepted

B. The project should be rejected

C. You would be indifferent between taking the project and rejecting it, because the required return and the average of the two IRRs are equal.

D. You should calculate the NPV.

iv. A corporate law firm is evaluating a new project: they are considering adding a corporate tax law practice. To accomplish they will hire two new senior attorneys, five associates and other staff. To house this additional staff, they will need to use an additional floor in the office building, which they already own. When they analyze the project, they consider the use of space they already own as "free." What mistake are they clearly making?

A. They are neglecting necessary working capital investments

B. They are ignoring the opportunity cost of using the additional space

C. They are including sunk costs in their analysis

D. They aren't including erosion of their other projects