1. In determining which discount rate to apply to different potential investments, a company should apply the highest risk-adjusted discount to
a. the purchase of new equipment.
b. a new product in a related field.
c. the repair of old machinery.
d. a new product in a foreign market.
2. Thompson & Co. has no capital rationing constraint. Additionally, the firm's investment alternatives are not mutually exclusive. Therefore, the company should
a. accept all investment proposals that provide returns greater than the after-tax cost of debt.
b. accept all investment proposals that have a positive net present value.
c. accept all investment proposals that have positive cash flows.
d. accept all investment proposals for which it can obtain financing.