The net present value: a. Increase as the required rate of return increases. b.

Question

The net present value: a. Increase as the required rate of return increases. b. is another name for the internal rate of return. c. method of analysis cannot be applied to mutually exclusive projects. d. Decreases as the required rate of return increases. 19. Which on of the following statement related to the internal rate of return (IRR) is correct? a. If the IRR exceeds the required return, thye profitability index will be less than 1. 0. b. IRR is a better evaluation tool than NPV when projects are mutually exclusive. c. A project has multiple IRRs if the projects cash flows are nonconventional. d. If two projects are mutually exclusive, select the project with the highest IRR.

Explanation / Answer

Solution-18

d. Dcreases as the required rate of return increases.

Explanation-

If the required rate of return is increase than the NPV always decrease.

Solution-19

c. A project has multiple IRRs if the project's cash flows are nonconventional.

Explanation-

If the cash flows of the projects are unconventional because of the project have multiple IRRs.

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