methods_____agree.

A.always

B. never

C. Sometimes

The methods agree.

The method conflict.

Reinvested at the _____________, and

A.internal rate of return (IRR)

B.Modified internal rate of return (MIRR)

C.required rate of return

flows can be reinvested is the__________.

I.Required rate of return

II.internal rate of return (IRR)

III.modified internal rate off return (MIRR)

the ____is usually the better

IRR method

NPV method

6. Understanding the NPV profile If mutually exdusive projects with normal cash flows are being analyzed, the net present value (NPV) and internal rate of return (IRR) methods agree. Their cash flows and NPV profiles are shown as follows. NPV IDollars 800 Year Project W Project X 0 $1,000 -$1,500 $350 350 500 5400 600 $600$750 $200 600 | proiect x . 400 Project w 200 If the weighted average cost of capital (WACC) for each project is 10%, do the NPV and IRR nethods agree or conflict? 200 O The methods agree O The methods conflict 2KU1O 12 14 112 COST OF CAP TAL Percent , key to resolving this conflict is the essumed envestment rate The No ntermedate cash flows are reinvested at the ssumes that the rete at wh ch cash flows can be renvested s the calculation implicty assumes that and the RR calculation s a result, when evallating mutuelly exciusive projects, the