finance chapter 9

Mutually exclusive projects are best defined as competing projects that:

Both require the total use of the same limited resource.

Which one of the following is the best example of two mutually exclusive projects?

Waiting until a machine finishes molding Product A before being able to mold Product B.

A project with financing type cash flows is typified by a project that has which one of the following characteristics?

a cash inflow at time zero

The IRR that causes the net present value of the differences between two project's cash flows to equal zero is called the:

crossover rate

Which one of the following methods of project analysis is defined as computing the value of a project based on the present value of the project's anticipated cash flows?

discounted cash flow valuation

The internal rate of return:

is easy to understand

If a firm accepts Project A it will not be feasible to also accept Project B because both projects would require the simultaneous and exclusive use of the same piece of machinery. These projects are considered to be:

mutually exclusive

Which one of the following characteristics is most associated with financing type projects?

prepaid services

Which one of the following is a project acceptance indicator given an independent project with investing type cash flows?

Modified internal rate of return that exceeds the required return.

You are viewing a graph that plots the NPVs of a project to various discount rates that could be applied to the project's cash flows. What is the name given to this graph?

NPV profile

Which one of the following statements would generally be considered as accurate given independent projects with conventional cash flows?

The payback decision rule could override the net present value decision rule should cash availability be limited.

Assume a project is independent with financing cash flows. Which one of these statements is correct?

The project is acceptable if the required return exceeds the IRR

The internal rate of return is:

Tedious to compute without the use of either a financial calculator or a computer

Which one of the following statements related to the internal rate of return (IRR) is correct?

The IRR is equal to the required return when the net present value is equal to zero.

The final decision on which one of two mutually exclusive projects to accept ultimately depends upon which one of the following?

required rate of return