Question
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR = modified internal rate of
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR = modified internal rate of return. PI = profitability index.
| Project A | Project B | Project C | Project D | Project E | Project F | Project G | |
| NPV= | $4,711 | ($711) | ($657) | $334 | $9,842 | $7,360 | ($3,224) |
| IRR= | 44.51% | 5.47% | 8.06% | 12.98% | 22.56% | 17.19% | 5.47% |
| MIRR= | 25.23% | 7.50% | 8.97% | 11.57% | 16.26% | 13.70% | 7.50% |
| PI= | 2.178 | 0.822 | 0.945 | 1.028 | 1.394 | 1.294 | 0.871 |
The discounting rate (r) is 10%.
Which of the following 10 statements are true (there are several, select all that are correct). Consider each statement on its own separate from the others listed:
Question 14 options:
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If only projects B and C are mutually exclusive, under the NPV rule only project E should be taken
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If all projects are mutually exclusive, under the NPV rule only project E should be taken
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If projects A & B are mutually exclusive, projects C and D are also mutually exclusive and projects F and G are also mutually exclusive (all others are independent), under the MIRR rule all projects should be undertaken
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If all projects are mutually exclusive, under the IRR rule only project E should be taken
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If all projects are independent, under the MIRR rule projects A, D, E and F should be taken
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If all projects are independent, under the NPV rule, projects A, D, E, and F should be taken
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If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, D, E, and E should be undertaken
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If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, C, and E should be undertaken
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If all projects are independent, under the IRR rule, projects B, C and G should be rejected
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If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, and E should be undertaken
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Theoretical Foundations For Quantitative Finance
Authors: Luca Spadafora, Gennady P Berman
1st Edition
9813202475, 978-9813202474
