Question 6 An externality is a situation where a project would have an adverse effect on some other part of the firm's overall operations. If the project would have a favorable effect on other operations, then this is not an externality. True False Question 7 The regular payback method does not take account of cash flows beyond the payback period. The discounted payback method correct this fault True False Question 8 4 pt A conflict will exist between the NPV and IRR methods, when used to evaluate two equally risky but mutually exclusive projects, if the projects' cost of capital is less than the rate at which the projects' NPV profiles cross. True False Question 9 4 pts The cost of common equity through issuing new stocks should be the same as the required rate of return on a firm's current outstanding common shares True False