Essay Questions:
1- Do the NPV and IRR decision rules ever conflict? Discuss.
2- What’s wrong with Payback as a decision criteria? If two companies valued the same capital project, should the resulting NPVs be the same? Discuss.
3- Explain what is meant by market efficiency.
4- Does the EMH imply pricing perfection? Do stock market bubbles disprove the EMH?
5- What is Beta? How is it related to expected return?
6- A company can’t spend its Net Income. Explain why.
7- Is it always correct to reject a capital project that has an IRR less than its WACC?