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1. Which of the following with regard to Net Present Value (NPV) is correct? A) Accept a project when the NPV is negative. B) Accept
1. Which of the following with regard to Net Present Value ("NPV") is correct? A) Accept a project when the NPV is negative. B) Accept a project when the projected future cash flows are greater than the investment outlay. C) Accept a project when the NPV is positive. D) Accept a project when the cost is positive. 2. After studying different criteria rules used to evaluate proposed investments, a Finance 101 student made the following statements: Statement 1: The Net Present Value ("NPV) and Internal Rate of Return ("IRR") may give different decision rules when the cash flows are not conventional or in a situation involves mutually exclusive investment decisions. Statement 2: When there is a conflict between different decision rules, a financial manager should always rely on IRR to make decision. Statement 3: When there is a conflict between different decision rules, a financial manager should always rely on NPV to make decision. Which statement(s) is/are correct? A) Statement lonly B) Statement 1 and 3 C) Statement 1 and 2 D) Statement 2 and 3 3. NPV and IRR generally give a financial manager the same decision rule, EXCEPT the following condition(s): A) Conventional cash flows. B) Non-conventional cash flows. C) Mutually exclusive projects. D) Non-conventional cash flows and mutually exclusive projects
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