16.) Assume that a firm has accurately calculated the net cash flows relating to two independent investment proposals. If the net present value of both proposals exceed zero and the firm is not under the constraint of capital rationing, then the firm should: a. calculate the IRRs of these investments to be certain that the IRRs are greater than the cost of capital; if they are, the company should choose the project with the largest IRR. b. accept both projects. c. compare the profitability index of these investments to those of other possible investments. d. calculate the payback periods to make certain that the initial cash outlays can be recovered within a appropriate period of time. e. accept the proposal that has the largest NPV since the goal of the firm is to maximize shareholder wealth.

17.) Which of the following statements is false? a. Upon evaluating a project, we should focus on the incremental cash flows generated by the project. b. Cannibalization of existing product lines should be considered when evaluating a potential project. c. The value of land already owned should not be considered when evaluating a potential project. d. The capital a firm already spent on a marketing consultant should not be considered when evaluating a potential project. e. The greater the cash outflows, the more likely the project has a negative net present value.