Profitability index to evaluate mutually exclusive project

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Reference no: EM131343133

1. Which of the following statements is true?

a) We can use NPV to evaluate two mutually exclusive repeated projects.

b) To make an investment decision based on IRR, we do not need to know the appropriate discount rate.

c) We can use profitability index to evaluate mutually exclusive project.

d) For a given project, NPV and Discounted Payback Period will reach the same decision if the targeted time is infinity.

e) When comparing two mutually exclusive projects using the IRR, we should always pick the one with a higher IRR.

2. The operating cash flow for a project should exclude which one of the following?

a) taxes

b) variable cost

c) fixed cost

d) interest expense

e) depreciation tax shield

Reference no: EM131343133

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