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You Are Deciding Where to Invest $100,000 and You Have

Question 3

Multiple Choice

You are deciding where to invest $100,000 and you have narrowed your choices to two options,I and II.Using the net present value method with a cost of capital of 10%,you have determined that NPVI > NPVII.Which of the following statements is true?


A) If both NPVI and NPVII are less than 0,then the internal rate of return (IRR) for option I may be less than the IRR for option II
B) If both NPVI and NPVII are greater than 0,then the IRR for option I may be greater than or may be less than the IRR for option II.
C) If both NPVI and NPVII are greater than 0,then the IRR for option I must be greater than the IRR for option II
D) No matter what,the IRR for both options must be greater than 10%,the
E) cost of capital.

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