A) The incremental IRR investment rule applies the IRR rule to the difference between the cash flows of the two mutually exclusive alternatives.
B) When a manager must choose among mutually exclusive investments,the NPV rule provides a straightforward answer.
C) The likelihood of multiple IRRs is greater with the regular IRR rule than with the incremental IRR rule.
D) Problems can arise using the IRR method when the mutually exclusive investments have differences in scale.
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A) You should accept project A since its IRR > 15%.
B) You should reject project B since its NPV > 0.
C) Your should accept project A since its NPV < 0.
D) You should accept project B since its IRR < 15%.
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A) 0
B) 1
C) 2
D) 12
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A) 1
B) 2
C) 0
D) 3
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A) -$7500
B) -$7400
C) $6000
D) $7400
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A) The IRR investment rule will identify the correct decision in many,but not all,situations.
B) By setting the NPV equal to zero and solving for r,we find the IRR.
C) If you are unsure of your cost of capital estimate,it is important to determine how sensitive your analysis is to errors in this estimate.
D) The simplest investment rule is the NPV investment rule.
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