Question 20 Which of the following is correct? When evaluating mutually exclusive investments, we choose the one with a higher internal rate of return. If the internal rate of return of marginal investment is greater than the cost of capital, the additional investment is acceptable. The marginal internal rate of return analysis gives us the return on the additional investment. Question 21 When evaluating an investment, one should consider which of the following? Incremental change in net working capital Incremental change in capital outlay Incremental change in salvage value net of tax Incremental change in operating cash flow

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Question 20
Which of the following is correct?
When evaluating mutually exclusive investments, we
choose the one with a higher internal rate of return.
If the internal rate of return of marginal investment is
greater than the cost of capital, the additional
investment is acceptable.
000
The marginal internal rate of return analysis gives us the
return on the additional investment.
Question 21
When evaluating an investment, one should consider
which of the following?
Incremental change in net working capital
Incremental change in capital outlay
Incremental change in salvage value net of tax
Incremental change in operating cash flow
Transcribed Image Text:Question 20 Which of the following is correct? When evaluating mutually exclusive investments, we choose the one with a higher internal rate of return. If the internal rate of return of marginal investment is greater than the cost of capital, the additional investment is acceptable. 000 The marginal internal rate of return analysis gives us the return on the additional investment. Question 21 When evaluating an investment, one should consider which of the following? Incremental change in net working capital Incremental change in capital outlay Incremental change in salvage value net of tax Incremental change in operating cash flow
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