1. Which of the following statements is true?
a. The NPV profile graphs the project NPV as a function of its internal rate of return.
b. The crossover rate is where two mutually exclusive projects have the same NPV.
c. The modified internal rate of return addresses the issue of mutually exclusive projects.
d. Profitability index favors larger projects. e. None of the above.
2. Which of the following statements is true?
a. All else equal, an annuity will have a lower value if the discount rate is higher.
b. All else equal, present values increase with the discount rate.
c. All else equal, the greater the rate of return, the lower the future value.
d. All else equal, the lower the "t", the lower the annuity value.
e. None of the above.
3. Which of the following is most likely to result in a positive cash flow to creditors?
a. borrowing more money
b. issuing shares of stock
c. purchasing fixed costs
d. paying off existing debt
e. investing for the future