1-The Carrot Corporation is considering two MUTUALLY EXCLUSIVE projects, Project A and Project B. The required rate of return is 10%. Project A costs $95,000 and will generate $65,000 in Year 1 and $75,000 in Year 2. Project B costs $120,000 and will generate $64,000 in Year 1, then $67,000 in Year 2, $56,000 in Year 3, and $45,000 in Year 4. The company should select:

Select one:

a. Neither project

b. Both projects

c. Project B

d. Project A

2- Which of the following statements is INCORRECT?

Select one:

a. Positive NPV projects may be rejected when capital must be rationed.

b. IRR should not be used to choose between mutually exclusive projects.

c. The size disparity problem occurs when mutually exclusive projects of unequal size are being examined.

d. For a project with multiple sign reversals in its cash flows, the IRR method should be preferred over the NPV method.