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Consider two investment projects, projects A and B. Project A costs 750m and produces cash flows of 180m over each of the following six years.
Consider two investment projects, projects A and B. Project A costs 750m and produces cash flows of 180m over each of the following six years. Project B costs 1,200m and produces cash flows of 325m over each of the following five years. The required rate of return for the company is 7%. Consider the following statements: I. If projects A and B are independent projects, then both would be unacceptable when using the IRR rule and when using the NPV rule. FALSE II. If projects A and B are independent projects, then project A would be acceptable when using the IRR rule and the NPV rule, but project B would only be acceptable when using the IRR rule, but not when using the NPV rule. FALSE III. If projects A and B are mutually exclusive projects, then B is preferred according to the IRR rule. FALSE IV. If projects A and B are mutually exclusive projects, then A is preferred according to the NPV rule. FALSE Which of the above statements is true? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a I only b I and IV only c II only d I, III and IV only e All statements are false
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