Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the one with the higher IRR will also have the higher NPV, so no value will be lost if the IRR method is used.   WACC: 9.75%           0     1   2   3   4   CFS -$2,050 $750 $760 $770 $780 CFL -$4,300 $1,500 $1,518 $1,536 $1,554单项选择题

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Question7 Which of the following should be included in a project’s incremental cash flows?Select one alternative: Interest expense on debt used to finance the project The opportunity cost of using a warehouse the firm already owns Research spent last year deciding whether to pursue the project Dividends the firm expects to pay its shareholders ResetMaximum marks: 2 Flag question undefined

Question5 A project’s cash flows change sign more than once over its life. Which statement iscorrect?Select one alternative: The IRR is still unique and should be used to rank the project The payback rule is guaranteed to give the value-maximising decision Multiple IRRs (or none) may exist, so NPV at the required return is the safest criterion The profitability index removes the multiple-sign-change problem ResetMaximum marks: 2 Flag question undefined

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