7-1 When the expected market value is $75,000, based on NPV, should the Specialty Guitar Project be accepted? Why? A. YES, because NPV is greater than zero. B. YES, because NPV is less than zero. C. NO, because NPV is greater than zero. D. NO, because NPV is less than zero.

7-2 When the expected market value is $25,000, based on IRR, should the Specialty Guitar Project be accepted? Why? A. YES, because IRR is greater than zero. B. YES, because IRR greater than the discount rate. C. NO, because IRR is less than zero. D. NO, because IRR is less than the discount rate.

7-3 Does the expected market value affect the Payback Period? A. YES. B. NO. C. Can't be determined.

7-4 Change Keenan's Discount Rate from current 15% to 12%, and observe what happens to the NPV and IRR. A. When the discount rate decreases, NPV decreases. B. When the discount rate decreases, NPV increases. C. When the discount rate decreases, NPV does not change.

7-5 Change Keenan's Discount Rate from current 15% to 12%, and observe what happens to the NPV and IRR. A. When the discount rate decreases, IRR decreases. B. When the discount rate decreases, IRR increases. C. When the discount rate decreases, IRR does not change.

7-6 Now, change Keenan's Discount Rate from 12% to 20%, and observe what happens to the NPV and IRR. A. When the discount rate increases, NPV decreases. B. When the discount rate increases, NPV increases. C. When the discount rate increases, NPV does not change.

7-7 Change Keenan's Discount Rate from current 12% to 20%, and observe what happens to the NPV and IRR. A. When the discount rate increases, IRR decreases. B. When the discount rate increases, IRR increases. C. When the discount rate increases, IRR does not change.