Douglass Interiors is considering two mutually exclusive projects and have determined that the crossover rate

Which of the following statements related to the internal rate of return (IRR) are correct? I. The IRR method of analysis can be adapted to handle non-conventional cash flows. II. 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. III. The IRR tends to be used more than net present value simply because its results are easier to comprehend. IV. Both the timing and the amount of a project's cash flows affect the value of the project's IRR.    A.  I and II only B.  III and IV only C.  I, II, and III only D.  II, III, and IV only E.  I, II, III, and IV Refer to section 9.5

34.

Douglass Interiors is considering two mutually exclusive projects and have determined that the crossover rate for these projects is 11.7 percent. Project A has an internal rate of return (IRR) of 15.3 percent and Project B has an IRR of 16.5 percent. Given this information, which one of the following statements is correct?    A.  Project A should be accepted as its IRR is closer to the crossover point than is Project B's IRR. B.  Project B should be accepted as it has the higher IRR. C.  Both projects should be accepted as both of the project's IRRs exceed the crossover rate. D.  Neither project should be accepted since both of the project's IRRs exceed the crossover rate. E.  You cannot determine which project should be accepted given the information provided. Refer to section 9.5

35.

You are comparing two mutually exclusive projects. The crossover point is 12.3 percent. You have determined that you should accept project A if the required return is 13.1 percent. This implies you should:    A.  always accept project A. B.  be indifferent to the projects at any discount rate above 13.1 percent. C.  always accept project A if the required return exceeds the crossover rate. D.  accept project B only when the required return is equal to the crossover rate. E.  accept project B if the required return is less than 13.1 percent. Refer to section 9.5

36.

Graphing the crossover point helps explain:    A.  why one project is always superior to another project. B.  how decisions concerning mutually exclusive projects are derived. C.  how the duration of a project affects the decision as to which project to accept. D.  how the net present value and the initial cash outflow of a project are related. E.  how the profitability index and the net present value are related. Refer to section 9.5