A firm is considering projects S and L, whose each flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO wants to use the IRR criterion, while the CFO favors the NPV method, and you were hired to advise the firm on the best procedure. If the CEO's preferred criterion is used, how much value will the firm lose as a result of this decision? (required return: 13,00 %) 0 1 2 3 4 CF(S) -$1, 025 $375 $380 $385 $390 CF(L) -$2/150 $750 $759 $768 $777 a. #5, 83 b. $6, 14 c. $6, 79 d. $7, 13 e. $6, 46 Projects S and L are equally risky, mutually exclusive, and have normal cash flows. Project S has an IRR of 15%. while Project L's IRR is 12%. The two projects have the same NPV when the discount rate is 7%. Which of the following statements is CORRECT? a. If the discount rate is 6%. Project S will have the higher NPV. b.. If the discount rate is. 13%. Project S will have the lower NPV. C If the discount rate is 10% both projects will have positive NPVs. d. If the discount rate is 10%, both projects will have a negative NPV. c. If the discount rate is. 13% both projects will have positive NPVs. A project has a required return of 12% and a 6-year life. Which of the following is inconsistent with the other four? (Meaning: which statement is the odd one out of the five and does not go with the other four?) a PI = 1 b NPV = $0 c. IRK = 12% d the present value of the future cash flows equals the initial investment e. I he pay hack period is 6 years Which of the following are needed to use the internal rate of return for project evaluation? I. the timing (year) of the cash flows II. the cutoff point after which any future cash flows are ignored III. the rate designated as the required return for a project IV the amount of each cash flow a. II, III, and IV only b. I and IV only c I, III, and IV only d III and IV only e I, II. and III only The internal rate of return for a project will increase if: a live initial cost of a project is increased, b the total amount of the cash inflows is reduced c. the required rate of return is increased d the required rate of return is decreased. e each cash inflow is moved such that it occurs one year earlier than originally projected