1. One disadvantage of the internal rate of return is that:

		it deals with before tax cash flows.
		IRR ignores time value of money.
		IRR will always give the same project accept/reject decision as NPV.
		IRR requires long forecasts of future cash flows.
		None of the above

2. An independent project is acceptable on the basis of the profitablity index if

		the PI is greater than zero.
		the PI is greater than one.
		If the PI is equal to zero.
		None of the above

3. What is the net present value's assumption about how cash flows are reinvested?

		They are reinvested at the IRR.
		They are reinvested at the APR.
		They are reinvested at the firm's discount rate.
		They are reinvested only at the end of the project.

4. Your firm is considering an investment that will cost $250,000 today. The investment will produce a cash flow of $450,000 in five years. The discount rate that your firm uses for projects of this type is 12%. What is the investment's internal rate of return?

		178.93%
		12.47%
		12%
		Cannot be determined.

5. What is the internal rate of return's assumption about how cash flows are reinvested?

		They are reinvested at the firm's discount rate.
		They are reinvested at the required rate of return.
		They are reinvested at the project's internal rate of return.
		They are only reinvested at the end of the project.