1.) Jonathan is offered two mutually exclusive choices. #1) invest $1 at 9 a.m. and receive $2 at 10 a.m. #2) invest $10 at 9 a.m. and receive $13 at 10 a.m. Jonathan believes these are both great deals, offering positive NPVs and one-hour returns of 100% and 30%, respectively. Which investment should Jonathan make?

A.	#2, because it maximizes wealth
	B.	#1, because the annualized rate of return given a 100% increase in value over 1 hour would be incredible
	C.	neither investment involves enough monetary value to bother with
	D.	#1, because the percentage return is greater for a smaller amount invested
	E.	both investments will be undertaken

2.) Britney is evaluating capital investments for three firms. The first firm has an unlimited capital budget and is looking at four independent projects. The second firm has several perfectly divisible potential projects, but faces capital rationing. The third firm is trying to decide between mutually exclusive projects. The best capital budgeting techniques for these situations would be __________, __________, and __________, respectively.

A.	NPV; NPV; IRR
	B.	IRR; NPV; PI
	C.	NPV; IRR; NPV
	D.	NPV; PI; NPV
	E.	PI; PI; NPV

3.) Two firms are faced with the same potential investment. The project costs $12 million and will result in cash flows of $5 million per year for each of the next 3 years. Firm A has a discount rate of 10%, while Firm B's cost of capital is 14%. Based on NPV analysis, which of the following statements is true?

A.	Only firm B should invest in the project.
	B.	Both firms should invest in the project.
	C.	Only firm A should invest in the project.
	D.	Neither firm should invest in the project.
	E.	Firms with different costs of capital will always reject identical projects.