2.

An increase in interest rates would also increase the firm's WACC, decreasing projects' NPVs, thus changing the accept/reject decision for any potential project. The IRR's accept/reject decision would be affected in the same way due to the increased hurdle rate caused by the increase in the WACC.

True

False

If interest rates decrease, you would accept fewer projects regardless of evaluating them using NPV versus IRR.

True

False

Despite having fixed coupon payments and a fixed face value, non-callable bonds are risky investments.

True

False

Other things held constant, the more debt a firm uses, the higher its EBIT will be.

True

False

Although the next-to-last line on the income statement shows the firm's earnings and the last line shows the dividends the company paid, after-tax earnings are frequently called "the bottom line."

True

False