1. Assume that your organization's chief financial officer (CFO) has just completed a presentation to the board of trustees concerning the analysis of a proposed ambulatory surgery center costing $2 million. During the presentation, the CFO indicated that the project had a net present value (NPV) of $786,339 and an internal rate of return (IRR) of 17.3 percent. On the basis of its risk, the project was judged to have a cost of capital of 13 percent. Which of the following statements is most correct? a. The project is financially acceptable because its NPV is positive. b. The project is financially acceptable because its IRR is greater than zero. c. The project is financially unacceptable because its NPV is less than the project's initial investment cost. d. The project is financially unacceptable because its IRR is greater than its cost of capital. e. The project is financially unacceptable, but it may have sufficient social value to make it worthwhile. 3. A net present value of zero ($0) signfies that the project's cash inflows will (1) be sufficient to recover the project's costs and (2) earn a return equal to the project's opportunity cost of capital. True or false Which of the following is not a relevant cash flow when estimating the incremental cash flows for a new hospital service? a. The value of floor space needed for the project b. Revenues from an existing service that would be lost as a result of the new service c. Shipping and installation costs associated with the new service d. The cost of a consultant's report (concerning the feasibility of the service) completed (and paid for) in the previous year e. An increase in inventory costs that would result if the project is undertaken