This quiz is based on the documents and problems on investment criteria. Most do not require any computation, but numbers can be created to fit the situation if necessary.

5. (4 points) Another investment also has two internal rates of return, one at 20% and another at 32%. Describe what you would do to determine the range of costs of capital (interest rates) that would make you want to make this investment?

6. (4 points) Two investments, C and D, have two different internal rates of return. Cs internal rate of return is higher than Ds, but there is a cost of capital at which the net present values of the two investments are the same. Describe how to determine which costs of capital will make you choose investment D over C and then C over D.

7. (4 points) You are looking at something called mutually exclusive investments, but all you know is the difference between each investments cash flows over their 8 year lives. You also know the cost of capital to be used to find the net present values of the investments, but do not have any access to anything you can use to calculates them. You know someone who does, though, so what do you tell them to do?