1. Consider two mutually exclusive projects A & B. If you subtract the cash flows of opportunity B from the cash flows of opportunity A, then you should:
A) take opportunity A if the regular IRR exceeds the cost of capital.
B) take opportunity A if the incremental IRR exceeds the cost of capital.
C) take opportunity B if the regular IRR exceeds the cost of capital.
D) take opportunity B if the incremental IRR exceeds the cost of capital.
2. An NPV graph
A) shows the payback period - the point at which NPV is positive.
B) shows the internal rate of return - the point at which NPV is zero.
C) shows the NPV over a range of discount rates.
D) B and C are correct.