pacmandefense

t 0 1 2
Project A 100 275 300
Project B 100 300 200
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>According to the answers Prjoect A has multiple
IRRs and Project has no IRR
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Whenever you try solve for IRR and get a second degree equation with IRR as unknown, you can get 2 IRR instead of 1 IRR. It is the case of project A. As a rule, when you have a future cash flow a mix bag of in and out flow, whereas if you have a clean, plain vanilla case with one outflow at start then only inflow in future, you have only IRR.
Project BB has IRR =0, i.e., rate of return =0, it is easy to see since you have sum of all (undiscounted) cash flow =0 –you don’t earn any return at all.
2) A Sale of receivables can lead to :
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a)an increase in the interest coverage ratio and a
decrease in D/E ratio
b) an increase in the interest coverage ratio and
a decrease in the current ratio
c) a decrease in the interest coverage ratio and
an increase in D/E ratio
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>>answer is A
Hmm
I would vote for C, assuming that we are talking about plain vanilla sales of receivables with cash upfront (i.e., non recourse factoring, not fancy securitization or even factoring with recourse)
since the transaction will increase the interest expense with (face value of receivables  cash received) –interest coverage = EBIT/interest would decrease since EBIT stays the same.
Increase D/E since debt stays the same and equity lower because of increased interest expense as you mention earlier.
current ratio would decrease, as you mentioned earlier.