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**Review Questions**

- How is the NPV rule related to the goal of maximizing shareholder wealth?
- What is the intuition behind the payback rule? What are some of its drawbacks?
- What is the intuition behind the IRR rule? What are some of its drawbacks?
- Under what conditions will the IRR rule and the NPV rule give the same accept/reject decision?
- When is it possible to have multiple IRR's?
- How does the MIRR solve the problem of multiple IRRs?
- Why is it generally a bad idea to use IRR to choose between mutually exclusive projects?
- When should you use the equivalent annual annuity?
- What is the intuition behind the profitability index?