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Briefly answer the questions that follow. You are considering two mutually exclusive projects. The NPV for project one is positive and higher than the NPV
Briefly answer the questions that follow.
- You are considering two mutually exclusive projects. The NPV for project one is positive and higher than the NPV for project two, while the IRR for project two is higher than that for project one. Which project should the firm accept and why?
- When does a project result in only one IRR? If a project has more than one IRR, how can we use Excel to find the multiple IRRs?
- A diversified, low-risk firm is considering investing in a high-risk project in a new industry. Is it appropriate to use the firms WACC as the discount rate when evaluating this project? Why or why not?
- Briefly explain the benefits of a portfolio.
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Modern Portfolio Theory and Investment Analysis
Authors: Edwin Elton, Martin Gruber, Stephen Brown, William Goetzmann
9th edition
9781118805800, 1118469941, 1118805801, 978-1118469941
