3.Iapital budgeting analysis, do you always accept projects with the highest positive NFV and IRR? a. Yes, because it is the most scientific and objective way to determine the attractiveness of the project. b. No, other qualitative factors like timing of cash flow, size of the investment outlay and strategic importance of the project play a role too even if the positive NPV or IRR are the highest It depends on whether the projects are independent or mutually excltusive. d. Two of the above are correct. e. None of the answers above are correct. 39. In determining which mutually exclusive projects to accept, we may encounter conflicting decision points: one project may have a high IRR but low NPV, and another a high NPV but low IRR at cross-over point. Which factors contribute to this situation? a. Differences in timing of cash flow and size of project. b. Non-normal vs. normal cash flow stream. c. Both answers (a) and (b) are correct. d. Neither answers (a) nor (b) is correct. e. I don't really know the answer. 40. Which of the following statement is false? a. The optimal distribution policy strikes the balance between current dividends and capital b. Other things held constant, the higher a firm's target payout ratio, the higher its expected c. If investors prefer firms that retain most of their earnings, then a firm that wants to maximize d. A 100% stock dividend and a 2:1 stock split should, at least conceptually, have the same effect e. A "reverse split" reduces the number of shares outstanding. gains that maximizes the firm's stock price. growth rate should be. f its stock price should set a low payout ratio. on the firm's stock price