1. Andrew is evaluating two mutually exclusive investment projects (he can choose only one project). He has calculated the net present value (NPV) and internal rate of return (IRR) for each project: Project 1: NPV = $1500; IRR = 15% Project 2: NPV = $923; IRR = 12% Andrew should make which of the following recommendations concerning the two projects only based on NPV?
a. Project 1 b. Project 2 c. Both d. None e. Insufficient information
2. Which of the following statements is false?
a. Present value and interest rates are inversely related assuming interest rate is always positive
b. If compounding frequencies increase, future value increases
c. When expected rate of return increases, the price of investment also increases
d. Before-tax WACC is lower than after-tax WACC