Question 4 (4 points) ◄ Listen The IRR of normal Project X is greater than the IRR of normal Project Y, and both IRRs are greater than zero. Also, the NPV of X is greater than the NPV of Y at the cost of capital. If the two projects are mutually exclusive, Project X should definitely be selected, and the investment made, provided we have confidence in the data. Put another way, it is impossible to draw NPV profiles that would suggest not accepting Project X. True False

Question 4 (4 points) ◄ Listen The IRR of normal Project X is greater than the IRR of normal Project Y, and both IRRs are greater than zero. Also, the NPV of X is greater than the NPV of Y at the cost of capital. If the two projects are mutually exclusive, Project X should definitely be selected, and the investment made, provided we have confidence in the data. Put another way, it is impossible to draw NPV profiles that would suggest not accepting Project X. True False

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

Problem 1PS

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QUESTION 36 When evaluating an investment or project, Companies need to consider risk as a factor because: OA. A. All projects carry the same level of risk B. B. All projects do not carry the same level of risk C.C. Risk allows a company to measure the relative Net Present Value of an investment OD. D. Both B & C QUESTION 37 The Coefficient of Variation is the best measure of risk because: OA. A. It is a relative measure of risk, allowing companies to measure projects with different expected values. B. B. Is an absolute measure of risk O C.C. Is harder to calculate OD. D. Is never used QUESTION 38 Standard Deviation is an absolute measure of risk because A. It allows companies to measure projects with different expected values B. It measures risk in an absolute fashion, risk is measure based on the expected value. C.It can only be used to compare projects with the same expected value. D. Both B & C
2) The expected return of Project Y is at least equal to the expected return of Project X, and the variance of Y is less than that of X. What would you do? A) Prefer Project Y B) Accept both projects C) Prefer Project X D) Reject both projects.
In a few sentences, answer the following question as completely as you can. According to your textbook, “an investment should be accepted if the net present value is positive and rejected if it is negative” (p. 239). What does an NPV of zero mean?If you were a financial decision maker facing a project with NPV of zero (or close to zero) what would you do? Can you think of any other factors that might influence your decision?
solve this parctie problem
Question 6 Which one of the following methods predicts the amount by which the value of a firm will change if a project is accepted? O Payback O Profitability index O Net present value O Internal rate of return O Discounted payback
Which of the following statements are true? I At higher discount rate, a project is more likely to be rejected. II A project is acceptable if the IRR = 8% while the cost of capital = 5%. III IRR does not account for time value of money. Group of answer choices 1. All of the above. 2. I and II 3. I and III 4. II and III
1. Compare and contrast the beta of the project and explain how it will affect the return on investment of the project. 2.
Engineering Economics
The benefits of CSR investments a. are always easy to measure quantitatively b. must be evaluated qualitatively for the projects that cannot be evaluated quantitatively c. must be evaluated using all three aspects of the triple bottom line d. cannot be evaluated qualitatively
29....When using the NPV method the decision making rationale includes the following (select all that apply): a.If projects are mutually exclusive, accept the project with the highest positive NPV. b.If projects are independent, accept if the project NPV<0. c.If projects are independent, accept if the project NPV>0 d.If the projects are mutually exclusive, accept the project with lowest NPV.
4

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