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6. The NPV of a project a. Measures the percentage increase in shareholder wealth if a project is accepted. b. Equals the net investment cash

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6. The NPV of a project a. Measures the percentage increase in shareholder wealth if a project is accepted. b. Equals the net investment cash outflow when the discount rate is 0%. c. Measures an expected dollar change in shareholder wealth if a project is accepted d. Is greater than zero if IRR-MCC. 0 1 7. You are considering an investment with the following cash flows. If the required rate of return for this investment is 13.5 percent, should you accept it based solely on the internal rate of return rule? Why or why not? Year Cash Flow -$12,000 $ 5,500 2 $10,000 3 $ 1,500 Yes, because the IRR exceeds the required return b. Yes, because the IRR is a positive rate of return No; because the IRR is less than the required retum No, because the IRR is a negative rate of return You cannot apply the IRR rule in this case because there are potentially multiple IRRs. d e

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