9. Mohammed Bayyoud corp. expects to earn $600,000 if the economy is good and only $200,000 if the economy is bad. Mohammed estimates a 65% probability of a good economy and a 35% probability of a bad economy. The NPV of the project with a discount rate of 20%? Can Mohammed accept the project?

a.

NPV -$19,181.82, No, Mohammed Should Accept the project

b.

NPV - $16,666.67 No, Mohammed Should reject the project

c.

NPV -$19,181.82, Yes, Mohammed Should Accept the project

d.

NPV - $16,666.67 yes, Mohammed should accept the projects

24. What is the decision rule for accepting or rejecting proposed projects when using net present value?

a.

Any project with a positive and negative net present value would be rejected.

b.

When using the net present value decision rule any project with a net present value less than or equal to the value of the projects would be acceptable.

c.

When using the net present value decision rule any project with a net present value greater than or equal to zero would be acceptable.

d.

negative or positive NPV does not really affect the value of the firm

25. What is the decision rule for accepting or rejecting proposed projects when using internal rate of return?

a.

Whenever the internal rate of return is greater than or equal to the required rate of return, the hurdle rate, the project is accepted.

b.

Whenever the internal rate of return is less than the required rate of return, the hurdle rate, the project is accepted.

c.

When the internal rate of return is more than this required rate of return, the project is accepted.

d.

when the internal rate of return is equal to the IRR then accept the project