4. Explain why IRR is biased in favor of short-term projects. Or What is the implicit assumption about the reinvestment rate when calculating the IRR? How does this assumption induce a bias in the evaluation of mutually exclusive projects?

5. What are the additional costs incurred by firms when raising capital externally compared to obtaining funds internally? For which types of firms will these costs be more significant?

6. Why is interest ignored when calculating project CFs? Given this treatment of interest, how are the tax savings from interest accounted for when evaluating projects?

7. What is needed for firms to earn positive NPV from their investments / an IRR higher than WACC?

8. What are the potential reasons why leasing may be advantageous? (Be sure to discuss how competition amongst lessors ensures that the lessee benefits from leasing.)

Please Answer these questions.