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1-Which of the following statements is INCORRECT? Select one: a. If the IRR is greater than the required return, then the profitability index will be
1-Which of the following statements is INCORRECT?
Select one:
a. If the IRR is greater than the required return, then the profitability index will be greater than one.
b. If two projects are mutually exclusive, then the IRR is more important than the NPV in deciding the project that should be chosen.
c. Advantages of the payback period include that it is easy to calculate, easy to understand, and that it is based on cash flows rather than accounting profits.
d. An acceptable project should have an NPV greater than or equal to zero and a profitability index greater than or equal to one.
2-Which of the following statements is INCORRECT?
Select one:
a. Required rate of return reflects the costs of funds needed to finance a project.
b. Mutually exclusive project with the highest positive NPV will also have the highest IRR.
c. A project with a payback period of 4 years is acceptable as long as the company target payback period is greater than or equal to 4 years.
d. One drawback of the payback method is that some cash flows may be ignored.
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