What is Project Bs IRR?

Project A Project B

Year Cash Flow Cash Flow

0 -$75,000 -$25,000

1 $30,000 $12,000

2 $30,000 $13,000

3 $40,000 $13,000

	a.	8.06%
	b.	23.87%
	c.	15.24%
	d.	10.74%

Which one of the following statements is incorrect?

	a.	Side effects or externalities should be considered in estimating the projects cash flow
	b.	The opportunity cost of a company-owned building that is going to be used in a new project should not be included as a cash outflow from the project.
	c.	Sunk costs should not be considered in estimating the projects cash flow.
	d.	Interest expense should not be included as a cash outflow when analyzing a project.

The financial planning method in which accounts vary depending on a firms predicted sales level is called the _____ approach.

	a.	sales reconciliation
	b.	common-size
	c.	sales dilution
	d.	percentage of sales

A firm has current sales of $924,000 and is operating at 84 percent of its fixed asset capacity. What is the maximum sales level before any new fixed assets are needed, i.e., the full capacity sales?

	a.	$900,000
	b.	$1,250,000
	c.	$1,000,000
	d.	$1,100,000

Net present value:

	a.	is less useful to decision makers than the internal rate of return when comparing projects with different cash flow pattern
	b.	can be used when deciding between two mutually exclusive projects
	c.	remains positive as the cost of capital increases and the profitability index becomes less than one
	d.	a and c are correct