Voda plc is considering launching a new product. The company accountant hasjust prepared calculations to show that the NPV of the product is estimated to be positive. She has discovered, however, that some items of information had not been provided to her prior to carwing out her calculations. They are as follows: 1. The new product can be used in conjunction with another profitable product that the company already produces. As a result, sales of the other product are likely to increase. 2. Two months earlier, the company signed a binding contract to lease a factory in anticipation of the product being launched. The rst lease payment will be made in three months' time. What effect (increase/decreaseo effect) will these items of information have on the estimated NPV of the product? Item 1 Item 2 O A. Increase Decrease O B. Increase No effect 0 C. No effect Decrease O D. No effect No effect When using the internal rate of return method, interest payments should for the purposes of calculation. O A. be included 0 B. be discounted O C. not be discounted O D. not be included Which ONE of the following is true of the internal rate of return (IRR) approach to assessing investments? O A. Use of IRR can be problematic when a project has unconventional cash ows 0 B. IRR fails to take all of the cash flows into account 0 C. IRR does not properly take the timing of cash flows into account 0 D. Use of IRR always promotes wealth maximisation Why is the payback method of investment appraisal often considered inferior to NPV? O A. Because it uses profits rather than cash flows in the evaluation O B. Because it does not take account of the time value of money O C. Because it does not calculate how long it will take to recoup the money invested O D. Because it is more difficult to calculate