Multiple Choice-3 points per question 1. If two projects have the same, positive NPV, then: Name: They also have the same IRR They are mutually exclusive projects. They add the same amount of value to the firm. a. b. C. 2. Which of the following factors will change when interest rates change? a. b. c. The present value of a bond's payments The coupon payment of a bond The expected cash flows from a bond 3 If a project has a cost of $50,000 and a profitability index of 0.4, then: a. its IRR is 20%. b.its NPV is $20,000. c. its cash inflows are $70,000. 4. Assume a project has forecasted sales which exceed the accounting break-even level but are less than the economic break-even level, which of the following would be true related to the project? T project has a a. negative after-tax income on the income statement b. positive after-tax income on the income statement c. positive NPV 5. You just reviewed your junior analyst's NPV analysis which completely omitted the depreciation expense on equipment purchased for the project. The NPV of the project was $0 according to this analysis. If this analysis had been done correctly, the NPV would likely have been: a.negative b. $0 (i.e. no change) c. positive a company has an opportunity cost of capital that is greater than zero and has cash flow 6. Assume related to change in net working capital (NWC) as follows Year 0 = (10.000), Year 14,000, Year 24,000, Year 3 : +2,000 Given this information, if NWC requirements doubled (ie. each years NWC cash flows were twi much), what would be the impact on NPV? a. No impact b. Increase cDecrease