Time: 0 1 2 3 Investment A: -$100 25 30 40 58 Investment B: -$100 50 40 30 20 An investor is considering the two mutually exclusive investments shown above (numbers are in million dollars). Her cost of capital is 11%. Which of the following statements about these investments is true? The investor should take investment A since it has a greater IRR. The investor should take investment A since it has a greater NPV. The investor should take investment B since it has a greater IRR. The investor should take investment B since it has a greater NPV. QUESTION 24 Which of the following statements is TRUE? We cannot convert any bond price into a yield to maturity, and vice versa. The internal rate of return (IRR) of an investment in a bond (and holding it until its maturity) is given a special name, the yield to maturity (YTM). Prior to its maturity date, the price of a zero-coupon bond is always greater than its face value. The yield to maturity of a bond depends on its total face value. Consider a project with the following cash flows: Year 0 1 2 3 4 Cash Flow -10,000 4,000 4,000 4,000 4,000 What is the internal rate of return (IRR) of the above project? 20.82% 23.23% 21.86% 22.05%