All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR = modified internal rate of return. PI = profitability index.
Criteria: |
Project_A |
Project_B |
Project_C |
Project_D |
Project_E |
Project_F |
Project_G |
NPV= |
$137,083 |
$31,290 |
$6,016 |
$7,647 |
($584) |
$12,521 |
$9,214 |
IRR= |
31.80% |
48.34% |
12.03% |
11.30% |
9.94% |
26.79% |
37.87% |
MIRR= |
18.52% |
23.52% |
10.62% |
10.59% |
9.97% |
23.53% |
20.76% |
PI= |
1.69 |
2.25 |
1.040 |
1.038 |
0.999 |
2.25 |
1.92 |
The discounting rate (r) is 10%.
Which of the following 10 statements are false/incorrect (there are several, select all that apply). Consider each statement on its own separate from the others listed:
Question 17 options:
If all projects are mutually exclusive, under the NPV rule only project A should be taken |
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If projects A, B and C are mutually exclusive (all others are independent), under the PI rule projects B, D, F and G should be undertaken |
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If projects A & B are mutually exclusive, projects C and D are also mutually exclusive and projects F and G are also mutually exclusive (all others are independent), under the IRR rule projects B, C, and G should be undertaken |
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If all projects are independent, under the PI rule, all projects should be taken |
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If all projects are mutually exclusive, under the NPV rule projects A, B, C, D, F and G should be taken |
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If all projects are independent, under the NPV rule, projects A, B, C, D, F, and G should be taken |
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If projects A, B and C are mutually exclusive, projects C and D are also mutually exclusive and (all others are independent), under the NPV rule projects A, D, and F should be undertaken |
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If projects A & B are mutually exclusive, projects C and D are also mutually exclusive and projects F and G are also mutually exclusive (all others are independent), under the MIRR rule projects B, C, and F should be undertaken |
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If all projects are mutually exclusive, under the IRR rule only project B should be taken |
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If only projects E and F are mutually exclusive, under the NPV rule only project A should be taken |
If all projects are independent, under the PI rule, all projects should be taken
If all projects are mutually exclusive, under the NPV rule projects A, B, C, D, F and G should be taken
If projects A, B and C are mutually exclusive, projects C and D are also mutually exclusive and (all others are independent), under the NPV rule projects A, D, and F should be undertaken
If only projects E and F are mutually exclusive, under the NPV rule only project A should be taken
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