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1. The crossover rate between two projects is the point at which ______________.

a. The two projects have an equal NPV.

b. The two projects have an NPV equal to zero.

c. The projects have equal payback periods.

d. Tthe IRR of the difference between the cash flows of projects is calculated

e. a and d.

2. In general, the value of any asset is:

a. the product of the expected benefits to be received from the asset

b. the future value of the benefits expected to be received from the asset

c. the present value of the benefits expected to be received from the asset

d. none of the above

3 Which of the following statements is CORRECT?

a. One defect of the IRR method versus the NPV is that the IRR does not take account of the time value of money

b. One defect of the IRR method versus the NPV is that the IRR does not take account of the cost of capital.

c. One defect of the IRR method versus the NPV is that the IRR does not take proper account of differences in the sizes of projects.

d. One defect of the IRR method versus the NPV is that the IRR does not take account of cash flows over a project's full life.

E. None of the above

4. The MIRR has two distinct advantages over the IRR:

a. Assumes cash flow reinvestment at the cost of capital, and eliminates the multiple IRR problem

b. Assumes cash flow reinvestment at the IRR, and eliminates the multiple IRR problem

c. Assumes cash flows are retained by the firm, and eliminates the multiple IRR problem

d. MIRR assumes that that the lives of two mutually exclusive projects are unequal

e. None of the above

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