1. D&B Contracting plans to purchase a new backhoe. The one under consideration costs $233,000, and has a useful life of 8 years. After-tax cash flows are expected to be $31,384 in each of the 8 years and nothing thereafter. What is the internal rate of return for the grader? Write answer as a decimal in the form .xxxx

2.

Which statement is MOST correct?

Group of answer choices

If a project's internal rate of return (IRR) exceeds the required return, then the project's net present value (NPV) must be negative.

The internal rate of return is the discount rate that equates the present value of the project's free cash flows with the project's initial cash outlay.

If Project A has a higher IRR than Project B, then Project A must also have a higher NPV.

If Project A has a higher IRR than Project B, then Project A must also have a payback period < 5 years.

3.

Why may a manager prefer to use NPV instead of IRR?

Group of answer choices

A manager should always prefer to use IRR instead of NPV.

A manager may prefer NPV instead of IRR because IRR has an arbitrary decision rule.

A manager should never prefer to use NPV instead of IRR.

When there are negative free cashflows in multiple years.