Question: Question 16 (4 points) All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR =
Question 16 (4 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.
| Project A | Project B | Project C | Project D | Project E | Project F | Project G | |
| NPV= | $4,711 | ($711) | ($657) | $334 | $9,842 | $7,360 | ($3,224) |
| IRR= | 44.51% | 5.47% | 8.06% | 12.98% | 22.56% | 17.19% | 5.47% |
| MIRR= | 25.23% | 7.50% | 8.97% | 11.57% | 16.26% | 13.70% | 7.50% |
| PI= | 2.178 | 0.822 | 0.945 | 1.028 | 1.394 | 1.294 | 0.871 |
| Criteria | Project_A | Project_B | Project_C | Project_D | Project_E | Project_F | Project_G |
| NPV= | $14,154 | $77,992 | $29,515 | $11,564 | ($8,849) | $26,514 | $30,022 |
| IRR= | 28.66% | 20.33% | 19.72% | 45.52% | 9.03% | 16.40% | 16.05% |
| MIRR= | 17.28% | 14.35% | 12.86% | 22.76% | 9.53% | 11.97% | 12.45% |
| PI= | 1.57 | 1.31 | 1.20 | 2.16 | 0.97 | 1.13 | 1.17 |
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:
Question 16 options:
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| If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, C, and E should be undertaken |
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| If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, D, E, and E should be undertaken |
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| If all projects are mutually exclusive, under the NPV rule only project E should be taken |
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| If all projects are mutually exclusive, under the NPV rule projects A, D, E and F should be taken |
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| If all projects are independent, under the IRR rule, all projects should be taken |
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| If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, and E should be undertaken |
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| If all projects are independent, under the NPV rule, projects A, D, E, and F should be taken |
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| If only projects B and C are mutually exclusive, under the NPV rule only project A should be taken |
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| If all projects are mutually exclusive, under the IRR rule only project E should be taken |
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| 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 all projects should be undertaken |
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