1. Which of the following statements regarding Internal Rate of Return (IRR) and Net Present Value (NPV) is/are most likely correct?

1: If the NPV and IRR methods give conflicting decisions for mutually exclusive projects, the IRR method should be used to select the project.
2: A project may have positive NPV even if its IRR is less than the cost of capital
3: IRR is the discount rate at which the NPV of the project is zero.
4: A project’s IRR can be positive even if the NPV is negative.

2. Given the following data, determine the cash flow from operations:

Sales = USD2,100m
Increase in inventory = USD200m
Depreciation = USD125m
Increase in accounts receivable = USD75m
Decrease in accounts payable = USD70m
After tax profit margin = 35%
Gain on sale of machinery = USD30m

3. A company had equipment worth USD50 million on 1 January. During the year, they purchased equipment for USD10 million. On 31 December, the equipment account showed USD40 million. All figures are shown at cost, before depreciation.

The amount of equipment sold during the end of the year, at cost, would be closest to:

4. Management fees in private equity are ________ those in hedge funds in that _________.

5. Asmita Mack, CFA, lives in the country of Onionland. Each morning, Asmita crosses the border to the neighboring country of WDC where she manages client portfolios. This morning, a positive earnings report was announced for HawkBlack, Inc. (ticker KANE). Asmita would like to invest in the stock and believes it would benefit her clients as well. WDC has a law that restricts portfolio managers from investing in securities owned by their clients. Onionland has no such law.

To comply with the Standard, what is the minimum that Asmita must do?