1. The internal rate of return rule can result in the wrong decision if:

the projects being compared are independent.

the projects being compared have normal cash flows.

the projects being compared are independent and have normal cash flows.

the projects being compared are mutually exclusive.

2. When attempting to reduce your overall tax liability, you would rather have a tax deduction than a tax credit.

True

False

3. Which of the following statements is FALSE?

The IRR investment rule will identify the correct decision in many, but not all, situations.

The IRR is the rate of return that makes the NPV equal to zero.

There are situations in which multiple IRRs exist.

The IRR decision rule will always identify the correct investment decision because it ignores the time value of money.