Question 52 (2 points)

The following net present value profile graph shows two mutually exclusive projects, A and B.

Assuming the company has a 5% cost of capital, what is the approximate net present value of project A and project B?

Question 52 options:

	A = $7,000 B = $5,000
	A = 12% B = 16%
	A = $4,000 B = $3,500
	A = 3,000 B = $3,000

Question 53 (2 points)

Refer to the net present value profile graph in question #52.

What is the approximate internal rate of return of project A and project B?

Question 53 options:

	A = $7,000 B = $5,000
	A = 12% B = 16%
	A = $4,000 B = $3,500
	A = 7% B = 7%

Question 54 (2 points)

Refer to the net present value profile graph in question #52.

Assuming a 5% cost of capital and that the two projects are mutually exclusive, which project should you select?

Question 54 options:

	Project A
	Project B
	Project A or B, since both have positive net present values.
	Both Project A and B, since both have positive internal rates of return.

Question 55 (2 points)

Refer to the net present value profile graph in question #52.

If the companys cost of capital were 10% and the two projects are mutually exclusive, which project should you select?

Question 55 options:

	Project A
	Project B
	Either Project A or B, since both have positive net present values.
	Either Project A or B, since both have positive internal rates of return.

Question 56 (2 points)

Refer to the net present value profile graph in question #52.

An investment project has a positive net present value. What do we know about the internal rate of return of the project? (Hint: Look at the NPV profile graph)

Question 56 options:

	The IRR is less than the cost of capital.
	The IRR is greater than the cost of capital.
	The IRR is equal to the cost of capital.
	The IRR is dependent upon the length of the project.

Question 57 (2 points)

Refer to the net present value profile graph in question #52.

The net present value profile will show a conflict between the net present value method and the internal rate of return method when: (Hint: Look at the NPV profile graph)

Question 57 options:

	the internal rate of return is greater than the cost of capital.
	the net present value of a project is negative.
	the cost of capital is to the right of the crossover point of the two projects.
	the cost of capital is to the left of the crossover point of the two projects.