1. Two mutually exclusive projects produce the same positive NPV at a discount rate of 11.34 percent. Both projects have 4-year lives. Project A has larger cash flows than Project B in the first two years. Given this information, you know that:

a) It makes no difference which project you accept as long as the discount rate does not exceed 11.34 percent.

b) Project A should always be preferred.

c) One project will be preferred at rates less than 11.34 percent and the other will be preferred at higher rates.

d) Project B must require a smaller investment than Project A at Time 0.

e) Project B should only be accepted if the discount rate is 11.34 percent.

2. Which one of these statements is correct given a project with conventional cash flows?

a . The project will have multiple IRRs.

b. The discounted payback period will be equal to or less than the life of the project.

c. The project's AAR will exceed its IRR.

d. The NPV is positive at the required rate of return.

e. The PI may be greater than, equal to, or less than one.