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Select all that are true with respect to the NPV rule for making capital investment decisions.

Select all that are true with respect to the NPV rule for making capital investment decisions.

Essentials Of Investments
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 4 Select all that are true with respect to the NPV rule for making capital investment decisions. When done correctly, NPV directly measures expected value creation NPV ignores cash flows in the distant future NPV causes decision makers to be myopic For independent projects, all positive NPV projects should be taken, and negative NPV projects should not be taken For mutually exclusive projects, choose the project with the highest NPV Question 5 Project A has an IRR of 25% and an NPV of $2 million. Project B has an IRR of 20% and an NPV of $3m. Select all the following statements that are true. O If the projects are mutually exclusive, select project A only If the projects are mutually exclusive, select project B only O If the projects are mutually exclusive, select both projects O If the projects are independent, select project A only O If the projects are independent, select project B only O If the projects are independent, select both projects
Transcribed Image Text:Question 4 Select all that are true with respect to the NPV rule for making capital investment decisions. When done correctly, NPV directly measures expected value creation NPV ignores cash flows in the distant future NPV causes decision makers to be myopic For independent projects, all positive NPV projects should be taken, and negative NPV projects should not be taken For mutually exclusive projects, choose the project with the highest NPV Question 5 Project A has an IRR of 25% and an NPV of $2 million. Project B has an IRR of 20% and an NPV of $3m. Select all the following statements that are true. O If the projects are mutually exclusive, select project A only If the projects are mutually exclusive, select project B only O If the projects are mutually exclusive, select both projects O If the projects are independent, select project A only O If the projects are independent, select project B only O If the projects are independent, select both projects
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