Question: Question 15 (7 points) All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR =

Question 15 (7 points)

All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR = modified internal rate of return. PI = profitability index.

Criteria:	Project_A	Project_B	Project_C	Project_D	Project_E	Project_F	Project_G
NPV=	$137,083	$36,290	$6,016	$7,647	($584)	$14,521	$8,214
IRR=	31.80%	48.34%	12.03%	11.30%	9.94%	26.79%	37.87%
MIRR=	18.52%	23.52%	10.62%	10.59%	9.97%	23.53%	20.76%
PI=	1.69	2.25	1.040	1.038	0.999	2.28	1.92

The discounting rate (r) is 10%.

Which of the following 10 statements are true (there are several, select all that are correct). Consider each statement on its own separate from the others listed:

1) If all projects are independent, under the NPV rule, projects A, B, C, D, F, and G should be taken

2) If all projects are mutually exclusive, under the PI rule only project F should be taken

3) If projects A & B are mutually exclusive, projects C and D are also mutually exclusive (all others are independent), under the IRR rule projects B, C, and G should be undertaken

4) If projects A & B are mutually exclusive, projects C and D are also mutually exclusive and projects F and G are also mutually exclusive (all others are independent), under the MIRR rule projects B, C, and F should be undertaken

5) If all projects are independent, under the IRR rule projects A, B, C, D, F and G should be taken

6) If all projects are independent, under the PI rule, all projects should be taken

7) If all projects are mutually exclusive, under the IRR rule only project B should be taken

8) If only projects E and F are mutually exclusive, under the NPV rule only project A should be taken

9) If projects A & B are mutually exclusive, projects C and D are also mutually exclusive and projects F and G are also mutually exclusive (all others are independent), under the NPV rule projects A, D, and F should be undertaken

10) If projects A & B are mutually exclusive, projects C and D are also mutually exclusive and projects F and G are also mutually exclusive (all others are independent), under the PI rule projects A, D, and F should be undertaken

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