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a) With the help of a figure explain when the NPV and IRR rules would lead to different and
similar project investment decisions for a CFO. [Capital Structure]
b) Some CEOs/CFOs are concerned that issuing shares will have a negative impact on their share
price because of the dilution in the earnings per share. (i) Explain what is meant by dilution in
the earnings per share. (ii) Will issuing shares always lead to a dilution in earnings per share?
Explain.

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