Tedder Mining has analyzed a proposed expansion project and determined that the internal rate of return

Which one of the following statements related to the internal rate of return (IRR) is correct?    A.  The IRR yields the same accept and reject decisions as the net present value method given mutually exclusive projects. B.  A project with an IRR equal to the required return would reduce the value of a firm if accepted. C.  The IRR is equal to the required return when the net present value is equal to zero. D.  Financing type projects should be accepted if the IRR exceeds the required return. E.  The average accounting return is a better method of analysis than the IRR from a financial point of view. Refer to section 9.5

30.

The internal rate of return:    A.  may produce multiple rates of return when cash flows are conventional. B.  is best used when comparing mutually exclusive projects. C.  is rarely used in the business world today. D.  is principally used to evaluate small dollar projects. E.  is easy to understand. Refer to section 9.5

31.

Tedder Mining has analyzed a proposed expansion project and determined that the internal rate of return is lower than the firm desires. Which one of the following changes to the project would be most expected to increase the project's internal rate of return?    A.  decreasing the required discount rate B.  increasing the initial investment in fixed assets C.  condensing the firm's cash inflows into fewer years without lowering the total amount of those inflows D.  eliminating the salvage value E.  decreasing the amount of the final cash inflow Refer to section 9.5

32.

The internal rate of return is:    A.  the discount rate that makes the net present value of a project equal to the initial cash outlay. B.  equivalent to the discount rate that makes the net present value equal to one. C.  tedious to compute without the use of either a financial calculator or a computer. D.  highly dependent upon the current interest rates offered in the marketplace. E.  a better methodology than net present value when dealing with unconventional cash flows. Refer to section 9.5