5. NPV profiles An NPV profile plots a projects NPV at various costs of capital, labeled "A" and in the graph. A project's NPV profile is shown as follows. Identify the range of costs (ranges labeled "A" and "B") of capital that a firm would use to accept and reject this project. No Dar 200 # 10 12 14 16 18 20 COST OF CARTAL true or False The NPV and IRR methods can lead to conflicting decisions for mutually exclusive projects NPV Dollars 300 200 100 -100 -200 0 24 10 12 14 16 18 20 COST OF CAPITAL (Percent True or False: The NPV and IRR methods can lead to conflicting decisions for mutually exclusive projects False True Grade it Now Save & Continue Continue without saving Attempts Average/2 8. Conclusions about capital budgeting The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment proposals that meet firm-specific criteria and are consistent with the firm's strategic goals. Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Based on your understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check out that apply. Because the MIRR and NPV use the same reinvestment rate assumption, they always lead to the same accept/reject decision for mutually exclusive projects. The discounted payback period improves on the regular payback period by accounting for the time value of money, For most firms, the reinvestment rate assumption in the NPV is more realistic than the assumption in the IRR. True or False: Sophisticated firms use only the NPV method in capital budgeting decisions. False True Grade It Now Save & Continue