1. Assume that Project 2's cost of capital is 12% and analyze the following statement: "Even though Project 2's IRRs areboth greater than the cost of capital, the project should still be rejected because its NPV is negative at the project's cost ofcapital, and consequently, the firm's value will be reduced if it is accepted." True or false?

2.The cash flows for Projects SSS and LLL are shown below. Each project has a cost of capital equal to 11%. Which of the following statements is true?

a. If Projects SSS and LLL are independent, then according to the IRR decision criterion both should be accepted because both have an IRR that exceeds the cost of capital. b. If these projects are mutually exclusive, then according to the IRR decision criterion Project SSS should be accepted because it has the larger IRR. c. both statements are true.