The internal rate of return is most reliable when evaluating:

a single project with cash outflows at time 0 and the final year and inflows in all other time periods.

a single project with only cash inflows following the initial cash outflow.

mutually exclusive projects of differing sizes

mutually exclusive projects with different time horizons.

a single project with alternating cash inflows and outflows over several years.

When projects are mutually exclusive and there is no constraint on capital to invest, selection should be made according to the project with the:

highest NPV.

highest IRR.

shortest payback period.

highest profitability index.

all of the above

Use of a profitability index to evaluate mutually exclusive projects in the absence of capital rationing:

will provide the same project rankings as an NPV criterion.

will provide the same project rankings as the payback period.

will provide the same project rankings as the return on invested capital.

can result in misguided project selections.

can result in proper project selections if used in conjunction with the IRR rule.

The return on invested capital most directly measures the projects impact on which one of the following:

the hurdle rate.

the internal rate of return.

free cash flow

capital structure.

earnings

Teldar Paper has up to $60 million that it can invest in the following projects:

Project	Initial Investment Required (In $Million)	Present Value of Future Cash Flows (In $Million)
A	18	27
B	12	18
C	8	12
D	8	10
E	10	11
F	40	80
G	4	5

Which projects should Teldar undertake?

A and F

A, B, C, D, and G

B, C, and F

D, E, and F

none of the above