Question

# All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal...

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.

 Project A Project B Project C Project D Project E Project F Project G NPV= \$4,711 (\$711) (\$657) \$334 \$9,842 \$7,360 (\$3,224) IRR= 44.51% 5.47% 8.06% 12.98% 22.56% 17.19% 5.47% MIRR= 25.23% 7.50% 8.97% 11.57% 16.26% 13.70% 7.50% PI= 2.178 0.822 0.945 1.028 1.394 1.294 0.871

The discounting rate (r) is 10%.

Which of the following 10 statements are true (there are several, select all that are correct). Consider each statement on its own separate from the others listed:

Question 15 options:

 If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, C, and E should be undertaken If all projects are mutually exclusive, under the NPV rule only project E should be taken If all projects are independent, under the NPV rule, projects A, D, E, and F should be taken If all projects are mutually exclusive, under the IRR rule only project E should be taken 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 all projects should be undertaken If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, D, E, and E should be undertaken If all projects are independent, under the MIRR rule projects A, D, E and F should be taken If only projects B and C are mutually exclusive, under the NPV rule only project E should be taken If all projects are independent, under the IRR rule, projects B, C and G should be rejected If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, and E should be undertaken

Statements are True:

• If all projects are mutually exclusive, under the NPV rule only project E should be taken
• If all projects are independent, under the NPV rule, projects A, D, E, and F should be taken
• If all projects are independent, under the MIRR rule projects A, D, E and F should be taken
• If all projects are independent, under the IRR rule, projects B, C and G should be rejected
• If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, and E should be undertaken

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