79) Geronimo, Inc. is considering a project that has an initial outlay or cost of $220,000. The respective future cash inflows from its four-year project for years I through 4 are: $50,000,$60,000,$70,000, and 11 $80,000, respectively. Geronimo uses the internal rate of return method to evaluate projects. Will Geronimo accept the project if its hurdle rate is 10% ? A) Geronimo will not accept this project because its IRR is about 8.70%. B) Geronimo will not accept this project because its IRR is about 9.70%. C) Geronimo will not accept this project because its IRR is about 4.60%. D) Geronimo will not accept this project because its IRR is about 6.50%. 80) Which of the statements below is TRUE? A) When we talk about standard cash flow for a project, we assume an initial cash outflow at the beginning of the project and negative cash flows in the future. B) A problem with IRR as a decision rule is that if the cash flow is not standard, there is a possibility of multiple IRRs for a single project. C) For every period that the cash flow has a change of sign (negative to positive or positive to negative), the NPV profile could cross the y-axis, generating a MIRR. D) When we apply IRR to standard cash flow, we have the potential for more than one IRR solution. 81) Which of the statements below is TRUE? A) A PI of 1.50 can be interpreted as meaning that for every $1.00 invested today the firm gets back $1.50 in current dollars. B) According to the profitability index (PI) decision criterion when the PI is greater than 1, the cost exceed the benefits. C) There are two acceptable projects, but we can only take one due to a shortage of funds. The PI for these two projects are: Project A: 2.25; Project B:1.89. We would take Project B. D) If we realize that NPV is the present value of the benefits minus the present value of the costs, then we simply need to subtract the costs to the NPV to get the present value of the benefits. 82) Pigeon, Inc, is currently considering an eight-year project that has an initial outlay or cost of $80,000. The future cash inflows from its project for years 1 through 8 are the same at $30,000. Pigeon has a discount rate of 13%. Because of concems about funds being short to finance all good projects, Pigeon wants to compute the profitability index (PI) for each project. What is the PI for Pigeon's current project? A) about 1.80 B) about 1.60 C) about 1.70 D) about 1.50 83) The model incorporates the time-value of moncy but still ignores cash flows after the cutoff date. A) IRR B) Payback Period C) Discounted Payback Period D) Modified Internal Rate of Return