A firm evaluates all of its projects by applying the IRR rule. The required return for the following project is 21%. The IRR is _______ and the firm should the project. ---- Year Cash Flow 0 -$28,643.00 1 $17,000.00 2 $15,400.00 $4,000.00 a) 24.26%; reject b) 16.05%; reject Oc) 26.30%; accept d) 26.30%; reject e) 16.05% ; accept 3 Which of the following does NOT enhance board of director effectiveness? a) majority of outside directors b) unclassified board of directors c) an interlocking board d) board members which are not overly busy e) All aid in enhancing board effectiveness Which is of the following is false? a) If the profitability index is greater than one then we know that NPV must also be greater than zero. b) The profitability index measures "bang for the buck" from a project. c) The profitability index is helpful under capital rationing conditions. d) The profitability index is the rate at which NPV is equal to zero. e) A profitability index of 1.2 suggests that the project provides $1.20 in benefit to the firm for each dollar invested. If two projects are mutually exclusive then selecting one project precludes the acceptance of the other project. a) TRUE b) FALSE TNT Demo & Excavation owns several large pieces of equipment. One of their bulldozer's was purchased for $75,000 about 5 years ago. It is 80% depreciated. If they sell the bulldozer for $25,000, the firm will a) realize a gain on the sale b) The answer depends upon the firm's tax rate. Oc) realize a loss on the sale Od) break-even on the sale e) The answer cannot be determined with the provided information Which of the following is NOT a potential problem with managerial behavior? a) Rejecting positive, but risky NPV projects b) excessive nonpecuniary benefits c) making excessive short-term investments and not returning capital to investors. d) Spending a lot of time reading the ESPN online sports page e) All are potential problems